- Monday was a slow day for US equities as traders awaited the crucial Jackson Hole symposium.
- This week, traders will watch earnings reports from major retailers like Walmart.
- Traders are watching geopolitical developments as Trump works to end the war in Ukraine.
Equities barely moved on Monday as most market participants remained on the sidelines ahead of crucial events this week. Traders are looking forward to the Jackson Hole symposium to see the economic and policy outlooks. At the same time, major retailers are set to release their earnings reports.
Monday was a slow day for US equities as traders awaited the crucial Jackson Hole symposium. Market participants are pricing an 85% chance that the Fed will cut rates in September. However, all this has come from recent economic data. Therefore, traders are now waiting for confirmation from policymakers.
If Powell assumes a more dovish tone, equities will likely rise. On the other hand, if Powell remains ambiguous, prices might drop. Although inflation is soft and the labor market has weakened, producer prices jumped in July. This might keep some officials cautious.
Jed Ellerbroek, portfolio manager at Argent Capital, said, “It’s a quiet day, with investors getting ready for things to come. The most important event is Powell’s speech, as we expect updated thoughts about how the Fed is viewing this economic environment where inflation is at a fairly high level while unemployment seems to have a rising trend.”
Meanwhile, some experts believe Powell will keep from giving a clear signal of a cut in September.
Last week, equities rallied after CPI data came in a bit softer than expected. The report eased concerns that Trump’s tariffs might boost price pressures. At the same time, data had revealed that the labor market had slowed down significantly.
S&P 500 (Source: Bloomberg)
On Friday, the retail sales report revealed solid consumer spending. However, consumer sentiment was low due to inflation worries. As a result, equities dropped. This week, traders will watch earnings reports from major retailers like Walmart and Target. Upbeat earnings will reveal strong consumer spending. On the other hand, downbeat earnings might intensify worries about the economy.
Elsewhere, traders are watching geopolitical developments as Trump works to end the war in Ukraine. Separate meetings with Putin and Zelenskiy went well, with both parties seeming ready to work on a peace deal. However, traders are waiting for more clarity on the future and to see whether the two leaders can meet.
