Home Stocks Stocks poised to edge higher as investors await Powell's Jackson Hole speech

Stocks poised to edge higher as investors await Powell's Jackson Hole speech

12 min read

U.S. stock benchmarks edged higher Friday, taking another run at record levels, as investors looked ahead to comments from Federal Reserve Chairman Jerome Powell at a closely watched symposium of central bankers in Jackson Hole, Wyo.

What are the main benchmarks doing?

The Dow Jones Industrial Average 

DJIA, +0.58%

rose 75 points, or 0.3%, to 25,730, the S&P 500 index

SPX, +0.59%

added 8 points, or 0.3%, to 2,865, while the Nasdaq Composite Index 

COMP, +0.89%

 added 40 points, or 0.5%, to 7,917.

For the week, the S&P  is up 0.2% and on track for its second straight weekly gain, an upswing that took it to a record earlier this week. The Nasdaq is up 0.8% on the week, based on its Thursday close. The Dow  is down less than 0.1% thus far this week, but the move implied by futures suggests it could eke out a modest gain. Should it do so, that would also mark the second straight positive week for the blue-chip average.

On Thursday, major indexes ended slightly lower in a quiet trading session marked by low volume.

What’s driving the market?

The main event on Friday will come when Powell gives a speech at the Fed’s annual meeting in Jackson Hole. Although the speech is unlikely to deviate significantly in tone or message from the minutes, it could provide more clarity into what Powell sees as the biggest potential trouble spots facing the economy going forward. His speech is scheduled for 10 a.m. Eastern time.

Trading has been quiet of late, with light volumes and narrow trading ranges, a function of a waning period of quarterly results, light on economic data and a seasonal muted period for trade. In that environment, Fed policy and political issues have emerged as primary focuses for traders.

Powell’s speech comes two days after the release of minutes from the Fed’s most recent confab, where the central bank indicated broad-based support for another interest-rate hike in September, with many officials stating that as long as economic data remain strong, “it would likely soon be appropriate to take another step in removing policy accommodation.”

Separately, Kansas City Federal Reserve President Esther George said that she thought two more interest-rate hikes would be appropriate this year and “several more” would likely be needed next year.

Elevated trade tensions between the U.S. and its major trading partners will also remain in view as the latest round of talks between the U.S. and China failed to produce any visible sign of progress. Reuters on Friday reported that China would continue to retaliate as the U.S. imposes tariffs, although the measures would be as targeted as possible as to avoid harming businesses in China, both domestic and foreign.

Don’t miss: Here’s why stocks are focused almost exclusively on trade, in one chart

This past week was perhaps most notable for the legal issues surrounding President Donald Trump. On Tuesday, the president’s former lawyer Michael Cohen said he violated campaign-finance law at Trump’s direction, while former Trump campaign chairman Paul Manafort was found guilty on eight charges, including tax fraud.

Stocks have mostly shrugged off the political news thus far, but any larger fallout could add to the uncertainty surrounding trade policy and the coming midterm elections. Trump himself said that the market would crash and that “everybody would be very poor” if he were to be impeached.

Read: Here’s why rising Trump impeachment odds aren’t rattling stock-market investors

What data are in focus?

U.S. durable goods fell in July for the third time in four months, driven by a drop in new contracts for passenger jets from Boeing Co. Orders for long-lasting goods fell 1.7% in July, the government said Friday. Economists surveyed by MarketWatch had forecast a 1.1% decline in orders for durable goods—products made to last at least three years.

What are strategists saying?

After the Fed minutes, “traders will be expecting much of the same” from Powell, said David Madden, market analyst at CMC Markets. “The ongoing trade spat with China has the potential to damage the U.S. economy, but we would need to see a prolonged period of tariffs before we see any significant changes to the respective economies.”

What stocks are in focus?

Autodesk Inc.

ADSK, +14.84%

 late Thursday reported second-quarter earnings and revenue that beat expectations. Shares surged 14% in early trade.

HP Inc.

HPQ, -2.48%

 late Thursday reported third-quarter revenue that missed expectations, although its adjusted earnings came in above forecasts. The stock dropped 2.3%.

Intuit Inc.

INTU, +1.04%

 late Thursday said that its chief executive officer and its chief technology officer planned to step down. The company named their replacements and reported adjusted fourth-quarter earnings that beat expectations. Shares of Intuit edge up by 0.6%.

SunTrust Robinson Humphrey upgraded Netflix Inc.

NFLX, +3.54%

 to buy from hold. The stock rose 2%.

Enbridge Inc.

ENB, -1.56%

 agreed to buy Spectra Energy Partners

SEP, +3.41%

in a deal valued at $3.3 billion. Shares of Spectra were up 4%.

Hibbett Sports Inc.

HIBB, -29.68%

 reported second-quarter revenue and same-store sales that were below expectations. It also cut its 2019 profit outlook. Shares of the company are down 27%.

Buckle Inc.

BKE, -4.14%

 rose 3.7% after it reported second-quarter results that topped expectations.

Ross Stores Inc.

ROST, -0.21%

 gave a full-year outlook that was below expectations. Gap Inc.

GPS, -11.02%

 posted second-quarter earnings and sales that beat expectations, but same-store sales at its flagship stores that lagged behind. Shares of Gap were down 9.4%, while those for Ross edged 0.2% higher.

S&P Dow Jones Indices late Thursday said that Arista Networks Inc.

ANET, +10.06%

would join the S&P 500, replacing GGP Inc.

GGP, +0.23%

which is being bought by Brookfield Property Partners LP

BPY, +0.25%

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