The Friday Market Minute
- Global stocks steady as investors await what could be the summer’s most important market event as Fed Chairman Jerome Powell speaks to the Jackson Hole Summit.
- Powell may not provide tapering details during his virtual address, but could lay out the roadmap for easing the pace of monthly bond purchases before the end of the year.
- U.S. COVID hospitalizations top 100,000, the highest in 8 months, and have more than doubled since July as Delta-variant infections accelerate.
- Benchmark 10-year bond yields hold steady at 1.345%, while the dollar index remains elevated against a basket of its global peers.
- Oil prices jump higher as Tropical Storm Ida forces drilling evacuations in the U.S. Gulf.
- U.S. equity futures suggest a firmer open on Wall Street ahead of PCE inflation data at 8:30 am Eastern time and Fed Chair Powell’s speech at 10:00 am Eastern time.
U.S. equity futures powered higher Friday, while the dollar extended gains and Treasury yields held steady, as investors looked to today’s speech from Federal Reserve Chairman Jerome Powell to hopefully clarify the longest-running debate in global markets.
Powell will deliver his virtual keynote address to the Kanas City Fed’s annual central bank symposium — normally held in the resort town of Jackson Hole, Wyoming — at 10 a.m. ET, with investors keen on hearing either details on tapering the Fed’s $120 billion in monthly bond purchases or an assessment of the current recovery that suggests deeper COVID uncertainty.
Evidence for the latter has certainly started to mount, particularly with respect to hospitalization rates, which topped 100,000 for the first time in 8 months and have more than doubled in July as the Delta variant swept through southern and southwestern states.
Support for a near-term taper — the first of several steps that would lead to interest rate hikes either late next year or in early 2023 — came from a handful of Fed Governors this week, including St. Louis President James Bullard, although none have voting power until at least next year.
Stocks are looking at solid opening bell gains Friday, however, suggesting a bias towards a tepid assessment from Powell and tame inflation data when the August PCE Price index data is published at 8:30 am Eastern time.
Futures contracts tied to the Dow Jones Industrial Average suggest a 110 point opening bell gain for the benchmark, with the S&P 500 set to rebound from last night’s decline — the first down down in six — with a 15 point advance.
Modestly lower Treasury yields and a small pre-market gains for Apple (AAPL) – Get Report and Tesla (TSLA) – Get Report have the tech-focused Nasdaq priced for a 53 point gain to start the Friday session.
Peloton Interactive (PTON) – Get Report shares, however, were marked 8.8% lower in active pre-market trading after the fitness equipment maker said it would cut the cost of its flagship exercise bike and cautioned it wouldn’t likely return to profit until 2023.
HP Inc (HPQ) – Get Report shares were also active, falling 3% to $28.24 each after the computer group topped Street forecasts with its third quarter earnings, bell fell shy of revenue estimates and detailed flat year-on-year PC sales, a stark comparison to the 27% gain reported by Dell Technologies (DELL) – Get Report.
In other markets, oil prices were back on the rise Friday as drillers moved to evacuate workers in the Gulf of Mexico in advance of Tropical Storm Ida, which the National Hurricane Center in Miami says will make landfall on the northern U.S. Gulf coast on Sunday.
WTI futures for October delivery were marked $1.09 higher at $68.51 per barrel while Brent contracts for the same month were seen 96 cents higher at $72.03 per barrel.
In Europe, the Stoxx 600 was little-changed in the opening hours of trading, but still on pace for its seventh consecutive monthly gain, the longest winning streak for the benchmark in eight years.
Overnight in Asia, the Nikkei 225 in Japan followed Wall Street lower with a 0.36% decline on the Friday session, while a late injection of cash from the People’s Bank of China boosted bluechip stocks in Shanghai and helped the region-wide MSCI ex-Japan benchmark rise 0.36% heading into the final hours of trading.