Focus turns to Jackson Hole

The stock markets are bracing themselves for a potentially significant impact as the focus shifts towards the annual Jackson Hole Symposium, where Federal Reserve Chairman Jerome Powell is scheduled to give a speech on Friday. This highly anticipated event comes amidst recent disagreements within the Fed, with a particular focus on inflation, tariffs, and labor market weakness.

The speech could hold the key to determining the future direction of the markets, as the reaction of the stock markets will depend on the members of the Federal Open Market Committee's interest rate expectations for 2026. A small 0.25 percentage point rate cut in September is widely expected in the market.

In the meantime, the stock markets showed a mixed performance in the previous trading day. The S&P 500 lost 0.40% to 6,370.17 points, while the Dow Jones Industrial Average fell 0.34% to 44,785.50 points. The Nasdaq 100 followed suit, dropping 0.46% to 23,142.58.

Among the major players, Tesla and Meta stocks both lost 1.2%, while Alphabet, the parent company of Google, was the only bright spot, managing to buck the negative market trend with a slight gain. Walmart's stock plunged 4.5% despite a strong quarterly sales increase and an upgraded annual forecast. The reason for Walmart's stock drop was earnings per share missing analysts' consensus estimates due to hedging measures.

Elsewhere, sales of existing homes showed unexpected resilience, with a rise instead of the expected decline. S&P Global reports that U.S. industrial production grew in August at its fastest pace in over three years. However, no new information about these developments was provided in relation to their potential impact on the markets.

Coty Inc.'s stock drop was due to a sales decline that exceeded the most pessimistic expectations and a bleak outlook. As a result, Coty Inc.'s stock fell 21.6%, reaching its lowest level since November 2020.

Michael Heise, chief economist at asset manager HQ Trust, expects hints of a more accommodative monetary policy from Jerome Powell. The anticipation is high, and the markets await Powell's speech with bated breath, hoping for some clarity on the Fed's future moves.