4:23pm: "Economy may not be cooling as expected," Powell said
The Dow closed Friday up 247 points, 0.7%, at 4,347, the Nasdaq Composite added 127 points, 0.9%, to 13,591 and the S&P 500 improved 29 points, 0.7%, to 4,406. The small-cap Russell 2000 index gained 7 points, 0.4%< to 1,854.
The S&P and Nasdaq each managed to snap three-week losing streaks, despite Federal Reserve Chairman Jerome Powell suggesting more rate hikes could be on the way during a speech at the Jackson Hole Economic Symposium.
“The economy may not be cooling as expected. So far this year, GDP (gross domestic product) growth has come in above expectations and above its longer-run trend, and recent readings on consumer spending have been especially robust,” Powell said. “In addition, after decelerating sharply over the past 18 months, the housing sector is showing signs of picking back up.”
However, the bullish take that only one or two hikes may be necessary seems to have won out, at least in the very short term.
12:05pm: Stocks struggle for direction as Powell hints of more rate hikes
US stocks were mixed in noon trading even as Federal Reserve Chairman Jerome Powell said the central bank is "prepared to raise rates further" during a speech at the annual Jackson Hole Economic Symposium.
At midday, the Dow rose 119 points to 34,218 while the S&P 500 added 5 points at 4,381 and the tech-heavy Nasdaq slipped 11 points to 13,453.
“The market could be upset that he didn’t come out and say we’ll be on pause ... the market has been desperate for months and months and wants to declare that the Fed is finished” LPL Financial chief global strategist Quincy Krosby said.
Notable movers included shares of Hawaiian Electric Industries, Inc, which sank 18% on media reports that Maui County is suing the utility company for damages over the island’s wildfires.
10:55am: US stocks retreat as Fed chair maintains hawkish stance
US stocks turned negative and extended their losses following Jerome Powell's speech at the Jackson Hole symposium in Wyoming, as he warned that the Federal Reserve isn't finished with raising interest rates as it battles to get inflation back to its 2% target range.
Powell told central bankers at Jackson Hole: “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
While core PCE inflation, which excludes volatile food and energy prices, has gradually declined from its peak of 5.4% in February 2022 to 4.3% in July this year, Powell stressed that sustaining this downward trend requires more than a few favorable months of data.
Shortly before 11am ET, the Dow Jones Industrial Average had shed 0.2% to 34,041, the S&P 500 was down 0.3% at 4,364 and the Nasdaq Composite was 0.4% down at 13,414.
9:40am: US markets climb as focus switches to Jackson Hole
US stocks pushed higher on Friday with investors hoping that Federal Reserve chair Jerome Powell won’t rock the boat when he speaks at Jackson Hole summit.
Shortly after the opening bell, the Dow Jones Industrial Average was up 0.6% at 34,302.08, the S&P 500 was up 0.5% at 4,398.34 and the Nasdaq Composite was up 0.6% at 4,398.34.
Powell is due to address the gathering of central bankers in Wyoming within the next hour and his words will be scrutinised for clues as to the future path of interest rates.
The CME Fedwatch tool places a 82% probability rates will be left unchanged when the Fed meets in September with a rate rise in November put at 50/50.
During last year’s gathering, stocks fell following Powell’s hawkish speech. The chair used the forum to warn of “some pain” ahead in the battle against inflation.
The dollar edged higher ahead of the speech.
SPI Asset Management analyst Stephen Innes commented: "I suspect the market is going through a reality hedging check just in case Chair Powell keeps the rate hike pedal to the metal for longer. And while central bank policymakers will be knowingly sensitive to keep things sailing on an even keel, the risk is if one issues a boat rocker comment.”
Stocks on the move include Hawaiian Electric, down 20%, after it suspended its dividend and saw S&P downgrade its credit rating.
7:00am: Futures higher ahead of Jerome Powell's speech
US stocks are expected to rally ahead of Federal Reserve chair Jerome Powell’s speech at the Jackson Hole economic symposium.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.3% higher, while those for the S&P 500 rose 0.3%, and contracts for the Nasdaq 100 futures were up 0.1%.
Susannah Streeter at Hargreaves Lansdown noted, “there is a sense of bated breath ahead of Fed Chair Jerome Powell’s speech later today.”
Powell’s hawkish comments to the gathering of central bankers last year prompted heavy falls in equities as he warned of “some pain” ahead in the battle against inflation.
“It would take a brave person to load up on shares just before Federal Reserve chair Jerome Powell makes his speech later today at the Jackson Hole summit," said AJ Bell’s Russ Mould.
“Any comments to suggest the Fed is going to keep raising rates for some time could trigger another risk-off mood for investors,” he said.
“August has been generally miserable for markets and a hawkish Powell could easily knock share prices once again before the month is up.”
Ahead of Powell’s speech, the Boston Fed president Susan Collins said more rate increases may be needed to bring inflation down to the central bank’s 2% target.
"I am not yet seeing the slowing that I think is going to be part of what we need for that sustainable trajectory to get back to 2% [inflation] in a reasonable amount of time," Collins told the Financial Times, later adding that "that resilience really does suggest we may have more to do".
Aside from Jackson Hole, the University of Michigan will release its final reading of consumer sentiment for July, with economists expecting the level to hold steady at the preliminary reading of 71.2, relatively unchanged from June.
Stocks on the move include Marvell Technology which has fallen back 7% in pre-market trading after reporting a loss in the financial second quarter compared to a profit the year before.
Revenue came in above the mid-point the firm guided to in May and it forecast sequential revenue growth would accelerate in the third quarter driven primarily by AI and cloud infrastructure.