Futures ebb as Powell’s speech nears
2022.08.26 14:58
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 15, 2022. REUTERS/Brendan McDermid/File Photo
(Reuters) – U.S. stock index futures slipped on Friday as investors worried about hawkish signals from Federal Reserve Chair Jerome Powell at the annual Jackson Hole symposium amid fears of slowing economic growth.
Powell’s speech at 1000 a.m. ET will be scrutinized for any indication that an economic slowdown might alter the Fed’s monetary policy tightening path and if the central bank can achieve a “soft landing.”
Wall Street has tumbled since the start of this year as investors priced in the expectation of aggressive interest rate hikes and a slowing economy.
However, it has rallied strongly since June, with the S&P 500 regaining half its losses for the year on the back of stronger-than-expected quarterly earnings and hopes that inflation has peaked.
Markets are now focused on any clues for the Fed’s upcoming meeting in September. Fed officials on Thursday were noncommittal about the size of the interest rate increase, but reiterated they will drive rates up and keep them there until inflation has been squeezed from the economy.
Traders are expecting a slightly higher chance of a third 75 basis point hike over a smaller 50 bps raise by the Fed, while economists see the central bank lifting rates by 50 bps at its meeting next month.
The Fed’s favored inflation gauge, the PCE price index, will also be released later in the day. Core personal consumption expenditures (PCE) price index is likely to have risen 0.3% in July, after rising 0.6% in the previous month.
Investors will also be focused on a slew of other economic data before the Fed Chair’s speech for clues on the economy’s strength including consumer spending, personal income and consumer sentiment.
At 06:49 a.m. ET, Dow e-minis were down 89 points, or 0.27%, S&P 500 e-minis were down 16.5 points, or 0.39%, and Nasdaq 100 e-minis were down 68 points, or 0.52%.
High-growth and technology stocks such as Nvidia (NASDAQ:NVDA) Corp and Apple Inc (NASDAQ:AAPL) edged lower in trading before the bell after posting sharp gains in the previous session.
Dell Technologies (NYSE:DELL) Inc fell 4.9% as it joined rivals in predicting a slowdown as runaway inflation and the darkening economic outlook prompt consumers and businesses to tighten their purse strings.
Gap Inc (NYSE:GPS) climbed 6.5% after the clothing retailer reported a surprise quarterly profit, topped revenue estimates and said sales improved in July and into August, with easing fuel prices helping lift discretionary spending.
