The expectations for this years meeting at the Jackson Hole Symposium have been quite high, especially for Jerome H. Powell’s speech which will be hel
The expectations for this years meeting at the Jackson Hole Symposium have been quite high, especially for Jerome H. Powell’s speech which will be held later in the evening. Markets are anticipating his comments to lean more toward the hawkish side, given that the employment sector remain robust. Although we have seen some soft numbers in recent weeks, showing that the US economy is softening too, but not as much as the European economy.
The anticipations are high after Powell delivered a speech dovish speech in Kansas City in Wyoming in last year’s summit. At that time, inflation had surged past 9%, and the FED started increasing interest rates. In this context, Mr. Powell used the opportunity to convey a firm message: central bankers were committed to their course of action until their objectives were achieved. Although inflation has been cooling off on its own, as energy prices declined.
The stock market has been bearish on such expectations, although we have seen a retrace higher, initially responding positively to the impressive earnings report presented by Nvidia Corp, a prominent chipmaker and a key player in artificial intelligence.
However, the initial gains gradually diminished as significant technology companies saw their stock values decline over the course of the trading session. By the end of the session, Nvidia managed to close slightly higher by 0.1%. All three major U.S. stock market indices recorded their most substantial drops since August 2nd. Specifically, the Dow Jones Industrial Average saw a decline of 373.07 points, equivalent to a 1.1% decrease, settling at 34,099.94 based on preliminary closing data provided by FactSet. This shows that traders are still fearing a hawkish Powell.
On the other hand, there’s the chance of a less hawkish/more dovish Powell today, which would send the USD down and risk assets surging higher, since this would be a bigger surprise. The economic activity has slowed as we mentioned above so the FED might be persuaded to turn softer as a result. The most expected theme would be higher for longer so we will follow the speech when he goes live.
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