As the Jackson Hole economic summit approaches, the stock market started out Wednesday with another calm day, maintaining its steady course. Jerome Powell, the head of the Federal Reserve, speaks on Friday.
The Dow Jones Industrial AverageDJIA +0.06% was down 27 points, or 0.1%, shortly after the opening bell. The Nasdaq CompositeCOMP +0.39% increased by 0.1% while the S&P 500 was practically flat.
Tom Essaye of Sevens Reports reports that “markets continued to stabilize with focus focused on the Jackson Hole Economic Symposium later in the week.”
Central bank presidents frequently share market-moving opinions at Jackson Hole, as shown with Ben Bernanke’s announcement of a second round of quantitative easing in 2009 or Jerome Powell’s reevaluation of inflation targeting in 2020. Investors are now speculating on whether the Fed Chair would reiterate a more dovish stance or sound more hawkish in contrast to the minutes from the July meeting.
More data will be available for investors to consider as they try to predict what the Fed might do. Orders for durable goods were flat month over month as opposed to a 2% increase in June. Following the reduction in new house sales that was announced in a statement on Tuesday, pending home sales are forecast to have fallen 3% month over month in July after falling 8.7% in June.
It wouldn’t be such a terrible sight for the stock market to see these drops. It would confirm that the recent interest rate increases by the Federal Reserve—as well as increased mortgage rates—might be having an effect on reducing demand.
The Fed’s ability to limit the rate of interest rate increases, which it has indicated it is likely to do, would then be confirmed.
As Wall Street waits for the Fed’s annual meeting in Jackson Hole on Friday, interest rates and stock prices haven’t changed much in recent days. The key indices marginally declined on Tuesday and slightly increased on Wednesday. The 2-year Treasury yield, which aims to predict where the federal funds rate will be in two years, has been hovering around 3.3% throughout the week, which is still below the multi-year high of 3.4% reached in mid-June.
But don’t anticipate too much action. When Powell finally hits the podium on Friday, that ought to happen.