Reaction To Powell Speech Likely To Drive Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Friday, with stocks likely to show a lack of direction following the strong upward move seen in the previous session.

Traders may be reluctant to make significant moves ahead of Federal Reserve Powell’s speech at the Jackson Hole economic symposium at 10 am ET.

Powell’s speech is likely to be closely watched for clues about the outlook for interest rates ahead of the next Fed meeting in September.

CME Group’s FedWatch tool is currently indicating a 43.5 percent chance of a 50 basis point rate hike and a 56.5 percent chance of another 75 basis point rate hike.

Ahead of Powell’s remarks, the Commerce Department released its report on personal income and spending in the month of July, which includes a reading on inflation said to be preferred by the Fed.

The report showed the annual rate of core consumer price growth slowed to 4.6 percent in July from 4.8 percent in June. The annual rate of growth slowed by slightly more than expected but remains elevated.

Stocks closed on a strong note on Thursday, extending gains from the previous session, with several counters seeing sustained buying ahead of Powell’s speech at the Jackson Hole economic symposium. Investors also digested a slew of earnings updates and economic data.

The major averages all ended with impressive gains. The Dow surged 322.55 points or 1 percent to 33,291.78. The S&P 500 jumped 38.55 points or 1.4 percent to 4,199.12, while the Nasdaq surged 207.74 points or 1.7 percent to 12,639.27.

NVIDIA Corp. (NVDA) shares gained more than 4 percent, recovering after early weakness, despite the company reporting weaker-than-expected quarterly results and lowering its earnings guidance.

Shares of Snowflake Inc. (SNOW) soared nearly 23 percent, buoyed by stronger-than-expected quarter earnings.

Meanwhile, Salesforce.com (CRM) shares drifted down more than 3 percent on weak full-year guidance.

Tesla (TSLA) also shed about 2 percent as a 3-for-1 stock split announced by the company came into effect.

Dollar Tree (DLTR) shares plunged more than 10 percent after the company slashed its full-year outlook.

On the economic front, data from the Commerce Department showed the U.S. economy contracted an annualized 0.6 percent in the second quarter following a 1.6 percent drop a quarter earlier.

Meanwhile, data from the Labor Department showed initial jobless claims dropped to 243,000 in the week ended August 20 from a revised 245,000 a week earlier.

Commodity, Currency Markets

Crude oil futures are rising $0.63 to $93.15 a barrel after plunging $2.37 to $92.52 a barrel on Thursday. Meanwhile, after climbing $9.90 to $1,771.40 an ounce in the previous session, gold futures are slipping $8.20 to $1,763.20 an ounce.

On the currency front, the U.S. dollar is trading at 136.81 yen versus the 136.49 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0007 compared to yesterday’s $0.9975.

Asia

Asian stocks followed Wall Street higher on Friday after data showed the U.S. economy didn’t contract by as much as previously thought during the spring.

All eyes were on Fed Chair Powell’s speech at the Jackson Hole Symposium due later in the day after several Fed officials stressed the need to keep raising rates to combat inflation. Investors hope that his speech will shed light on plans for more interest rate hikes.

Kansas City Fed president Esther George said Thursday that there is more work to be done to curb inflation but it was too soon to predict the size of the September rate hike.

Chinese shares gave up early gains to end lower despite news of a U.S.-China agreement on audit inspections. The benchmark Shanghai Composite Index dipped 0.3 percent to 3,236.32, while Hong Kong’s Hang Seng Index closed 1 percent higher at 20,170.04.

Japanese shares ended off their day’s highs, with the Nikkei 225 Index closing 0.6 percent higher at 28,641.38, led by industrials. The broader Topix ended up 0.2 percent at 1,979.59.

Tech stocks such as Advantest and Tokyo Electron climbed 1-2 percent. Startup investor SoftBank Group added 1.2 percent, buoyed by news of possible progress for China and the United States to hammer out an audit deal,

Seoul stocks extended gains for a third day running ahead of the gathering of central bankers in the United States. The Kospi edged up 0.2 percent to settle at 2,481.03. Chipmaker SK Hynix and battery maker LG Energy Solution both rose over 1 percent.

Australian markets rose notably as strong iron ore prices lifted mining stocks. The benchmark S&P/ASX 200 Index jumped 0.8 percent to 7,104.10, while the broader All Ordinaries Index gained 0.7 percent to end at 7,345.80.

Bega Cheese shares soared 11.8 percent after the dairy firm revealed a “milestone” revenue jump and a positive outlook for the coming year.

Europe

European stocks are little changed in cautious trading on Friday after a survey showed German consumer confidence declined further to a new record low in September.

Market research group GfK’s forward-looking consumer sentiment index fell to -36.5 in September from -30.9 in August as households started to build reserves to meet future energy bills, thus dampening the propensity to buy. The reading was forecast to fall moderately to -31.8.

While the U.K.’s FTSE 100 Index is up by 0.2 percent, the French CAC 40 Index is down by 0.1 percent and the German DAX Index is down by 0.2 percent.

Energy and services firm Centrica has climbed after Britain’s energy regulator Ofgem raised its cap on domestic energy bills to a record 3,549 pounds ($4,189) from Oct. 1.

Anglo American has also moved higher after major copper producing country Peru abandoned a plan to hike taxes on the mining industry amid falling metal prices, high inflation and slowing growth.

Micro Focus International shares have jumped to hit more than one-year highs after Canada’s OpenText struck a deal to buy the U.K. software firm in an all-cash deal of $6 billion including debt.

On the other hand, Danish brewer Carlsberg has dipped after saying it may need to “significantly reduce” or halt beer production in Poland.

U.S. Economic Reports

The Commerce Department released a report on Friday showing U.S. personal income increased by much less than expected in the month of July.

The report showed personal income edged up by 0.2 percent in July after climbing by an upwardly revised 0.7 percent in June.

Economists had expected personal income to rise by 0.6 percent, matching the advance originally reported for the previous month.

Meanwhile, the Commerce Department said personal spending inched up by 0.1 percent in July after jumping by a downwardly revised 1.0 percent in June.

Personal spending was expected to increase by 0.4 percent compared to the 1.1 percent surge originally reported for the previous month.

A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth slowed to 4.6 percent in July from 4.8 percent in June.

At 10 am ET, Federal Reserve Chair Jerome Powell is due o speak on the economic outlook before the 2022 Jackson Hole Economic Symposium.

The University of Michigan is also scheduled to release its revised reading on consumer sentiment in the month of August at 10 am ET. The consumer sentiment index is expected to be upwardly revised to 55.2 from the preliminary reading of 55.1.

Stocks In Focus

Shares of Affirm Holdings (AFRM) are moving sharply lower in pre-market trading after the financial technology company reported a wider than expected fiscal fourth quarter loss and provided disappointing guidance.

PC maker Dell Technologies (DELL) is also likely to see initial weakness after reporting mixed fiscal second quarter results and warning of slowing sales.

Meanwhile, shares of Workday (WDAY) are seeing significant pre-market strength after the human resources and enterprise software company reported better than expected fiscal second results and provided upbeat guidance.

Apparel retailer Gap (GPS) may also move to the upside after reporting an unexpected fiscal second quarter profit on revenues that exceeded analyst estimates.