Stock Markets Gain as the US Federal Reserve Hosts Jackson HoleAugust 25, 2022
Stock markets trade higher on Thursday on the back of the US Federal Reserve’s expected Jackson Hole symposium. Central bank executives from various parts of the world will be converging in the US for the economic meeting.
For the S&P 500 Futures, contracts on it rose by 0.6% following the index’s breakthrough out of a losing trend for the past three sessions. Dow Jones Futures, on its part, increased by 100 points which amount to 0.3%, and the tech-centered Nasdaq Composite Futures moved up by 0.8%.
Another one that seized the spotlight is Peloton Interactive. Specializing in making fitness materials and equipment, the firm, however, incurred a loss of over $1 billion in its fiscal 4th quarter. The company said its income came lower than what was speculated on Wall Street and it resulted in a 16% tumble of shares during trading before the market fully began.
Investors will now have their attention focused on the Federal Reserve’s event to get clues from the bank’s officials. They want information about the possible momentum and scale of the coming interest rate increment as the year draws to a close. Activities are appearing to take a slow turn in different phases of the US economy.
The part of the meeting that would be widely watched is scheduled for Friday. Then, the Federal Reserve Chairman, Jerome Powell is set to deliver an address that might give indications about the Reserve’s next monetary policy move. It should give a clue if there will be a 75 basis point interest rate increment or just a 50 basis points increment.
The Market’s Hawkish Expectation
A partner at TwentyFour Asset Manager, David Norris, said that the general expectation is that the Fed’s Powell will keep up with his promise of combating inflation. He also has to discourage the market from the view that the Federal Reserve has pivoted into dovishness.
Norris said the market is looking forward to a hawkish address from Powell on Friday that will be in tandem with higher interest rate increases.
But then, the Federal Reserve’s policy is largely expected to be determined by economic reports as received by every meeting. There is a long line of economic releases for traders this Thursday, along with the second estimated Q2 GDP, as well as the most recent jobless claims.
Nvidia fell by 3% after it released its quarterly reports on Wednesday. The reports fell short of expectations and reduce its guidance for the coming days.