Stock Market Today: Stocks Rise on Jackson Hole Speech

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U.S. stock futures rose sharply Friday morning, while Treasury yields and the dollar were largely unchanged as investors braced for a key speech by Federal Reserve Chairman Jerome Powell that could clarify the central bank’s plans for fall rate cuts.

Markets have been watching Powell’s speech, the opening address at the Fed’s annual central bank retreat in Jackson Hole, Wyoming, for much of the past month, and lost gains late last night on concerns that he could deliver a neutral or even aggressive message when he speaks at 10 a.m. ET.

Traders have been betting that the Fed will begin easing its benchmark lending rate, which stands at 5.375%, its highest level in two decades, next month in Washington, but are still uncertain about the pace and depth of the expected cuts.

This is partly due to the resilience of the domestic economy, which continues to defy recession forecasts, and partly to the slow decline in inflation.

Fed Chairman Jerome Powell will keep markets on edge ahead of his keynote address at the central bank’s Jackson Hole symposium later this morning.

Bloomberg/Getty Images

With global investors on edge and US stocks on the brink of their all-time highs set in July, Powell’s speech is likely to be crucial to the direction of the market, alongside next week’s results from tech giant Nivdia NVDA, heading into the final months of the year.

“Powell should lay the groundwork for the Fed’s first rate cut in more than four years,” said Adam Turnquist, chief technical strategist at LPL Financial. “Signs of easing price pressures and slowing economic growth will likely be enough to prompt policymakers to begin reducing the target rate.”

Related: Fed Chair Powell’s Jackson Hole Speech Could Disappoint Markets

The CME Group’s FedWatch survey continues to put the odds of a 50-basis-point cut next month at about 26.5%, odds that will likely change quickly once Powell starts speaking, and suggest investors are betting on at least a percentage point of reduction by year’s end.

The market’s key volatility indicator, the VIX, is also on the move, rising 4.4% to $16.98 in overnight trading as markets brace for action following Powell’s speech.

On Wall Street, S&P 500 futures are pointing to a gain of about 29 points at the open, while the Dow Jones Industrial Average is expected to advance 145 points. The tech-heavy Nasdaq is expected to advance 150 points at the open.

In the bond market, the yield on the benchmark 10-year Treasury note was holding at 3.861% ahead of trading in New York, with the rate-sensitive 2-year note set at 4.008%.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, fell 0.1% to 101.404, the lowest since late December.

More economic analyses:

• Kamala Harris sees markets aligning against Donald Trump
• CPI report challenges Fed rate cut forecast
• Main Street Companies Resist Wall Street’s Recession-Related Gloom

In foreign markets, the European Stoxx 600 index rose 0.27% in Frankfurt, while the British FTSE 100 gained 0.26% in London.

In Asia, the Nikkei 225 closed up 0.4% in Tokyo after aggressive rate comments from Bank of Japan Governor Kazuo Ueda, while the regional benchmark MSCI ex-Japan index fell 0.08% at the close of trade.

Related: Veteran Fund Manager Sees a World of Hurt Coming for Stocks