Investing.com -- Wall Street is seen trading in tight ranges Thursday ahead of more labor macro data, a speech by Vice President Kamala Harris and, perhaps more importantly, the start of the Jackson Hole symposium on Friday.
1. Powell speech to shape market’s stance
All eyes are focused on Wyoming's Grand Teton National Park on Friday, with Fed Chair Jerome Powell set to deliver a speech at the annual Jackson Hole symposium that will likely shape the market’s view of upcoming monetary policy and the economy.
Weakening U.S. economic data is giving the Federal Reserve the green light to cut interest rates, prompting growing conviction that the Fed will do so at its next meeting in September.
The minutes from the Fed’s July meeting showed a "vast majority" of policymakers agreed the policy easing would likely begin next month, which means Powell’s speech may be less about further shaping rate cut expectations and more about assessing where the economy stands ahead of this first cut.
Signs of a rapidly cooling labor market have fueled concerns over a significant slowdown in the U.S. economy, which cooled risk appetite this week.
Goldman Sachs (NYSE:GS) expects Powell's speech and subsequent interviews to emphasize data dependency and a cautious approach to rate cuts.
The firm anticipates that Powell will reiterate the Fed's readiness to act swiftly if economic conditions worsen but will avoid committing to aggressive easing without further data.
“While the academic part of the symposium has the potential to impact the long-run direction of policy, the side interviews should shed more light on immediate policy questions, analysts at the influential investment bank said.
2. Futures edge higher ahead of Jackson Hole
U.S. stock futures edged higher Friday, ahead of Fed Chair Jerome Powell’s key speech at the Jackson Hole symposium which could signal the start of the central bank rate-cutting cycle.
By 04:05 ET (08:05 GMT), the Dow futures contract was 105 points, or 0.3%, higher, S&P 500 futures climbed 23 points, or 0.4%, and Nasdaq 100 futures rose by 120 points, or 0.6%.
The benchmark Wall Street indices closed sharply lower Thursday, weighed by a surge in Treasury yields. The broad-market S&P 500 index fell 0.9%, the tech-heavy Nasdaq Composite slumped 1.7% and the Dow Jones Industrial Average dropped nearly 180 points, or 0.4%.
Despite these losses, the DJIA and the S&P 500 are still up modestly this week, while the Nasdaq is down just 0.1% week to date, amid optimism that the Fed is poised to ease monetary policy.
The U.S. economic data slate includes the latest numbers on building permits and new home sales for July later in the session, but the main focus will be on Powell and what he says about future interest rates.
In the corporate sector, Uber (NYSE:UBER) has announced a multiyear partnership with Cruise, a subsidiary of General Motors (NYSE:GM), allowing the latter's self-driving vehicles to be launched on Uber's ride-hailing platform.
Ross Stores (NASDAQ:ROST) stock rose sharply premarket after the retailer raised its fiscal 2024 profit forecast and posted second-quarter results above expectations late Thursday, benefiting from demand for its discounted apparel and easing freight costs.
3. BOJ’s Ueda confirms desire to lift rates
While Fed Chair Jerome Powell is firmly in the spotlight Friday [see above], there are other leading central bankers having to make policy decisions during these uncertain economic times.
Bank of Japan Governor Kazuo Ueda reaffirmed his desire earlier in the session to raise interest rates, but warned financial markets remained unstable.
"Japan's short-term rates are very low. If the economy is in good shape, they will move up to levels deemed neutral," Ueda said. But he added that there was "very high uncertainty on where rates will eventually rise to."
The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July, stepping away from its decade-long ultra-easy monetary policies.
In Europe, European Central Bank policymakers kept interest rates unchanged last month, having started a rate-cutting cycle in June, resulting in attention shifting to its September meeting.
The central bank has room to cut interest rates possibly two more times this year as inflation remains broadly on the declining path policymakers envisaged, ECB policymaker Martins Kazaks said on Thursday.
"Our June projections assumed two more rate cuts this year and right now I don’t see any reason why we shouldn’t follow through," Kazaks, Latvia's central bank governor said, adding that he would make up his mind about September only after August inflation figures are published and he saw the ECB's new projections.
4. Harris formally accepts Democratic nomination
Kamala Harris formally accepted her nomination as the Democratic nominee for the 2024 presidential race, in a speech on the final night of the Democratic National Convention in Chicago on Thursday.
Passing a tax cut for the middle class would be a main goal of her presidency, she said, while also pledging to improve housing and social care.
Harris also repeatedly brought up gun control and reproductive rights - two issues that have already been major campaigning points.
The first Harris-Trump debate is set for September 10, with the vice-presidential debate scheduled for October 1. A second presidential debate may be added in October.
Harris has been seen steadily catching up with Trump in a slew of recent polls, after President Joe Biden dropped out of the 2024 race earlier this year, with just over two months left to the polls.
Since August 1, the odds of a Republican victory in the White House have decreased by 10 percentage points, and the likelihood of a Republican sweep of both sides of Congress as well as the Presidency has fallen by 4 percentage points.
The most likely outcome of the upcoming election is a victory for Harris with a divided government, Goldman Sachs economists said earlier this week.
5. Crude on course for hefty weekly losses
Crude prices edged higher Friday, but were on course for steep weekly losses amid persistent concerns over slowing demand.
By 04:05 ET, the U.S. crude futures (WTI) climbed 0.5% to $73.39 a barrel, while the Brent contract rose 0.5% to $77.62 a barrel.
Both benchmarks hit their lowest levels since early January this week, with the Brent contract around 3% lower so far this week while the WTI contract has lost nearly 5%.
Recent data from China, the world’s top oil importer, has pointed to a struggling economy and slowing oil demand from refiners there, while the sharp revision to U.S. employment data earlier in the week raised the possibility of a hard landing for the U.S. economy, the largest consumer of energy.
A renewed push for a ceasefire in Gaza between Israel and Hamas, with U.S. and Israeli delegations meeting in Cairo to resolve differences over a truce proposal, has also helped ease supply worries and weighed on oil prices.
Fears of an oil supply glut were also in play, after U.S. oil production rose to a record high of over 13 million barrels earlier in August, while the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, has plans to raise output later this year.