Wall Street awaits Fed Chair Powell’s keynote speech

7:18 am ET, August 25, 2023

Will Fed Chair Powell’s Jackson Hole Speech Send Stocks Down Again?

When Federal Reserve Chairman Jerome Powell spoke about this time last year At the Kansas City Fed Symposium in Wyoming, he warned that interest rate hikes would be “painful” for American households. The Dow Jones Industrial Average fell 1,000 points Inside Answer

Will history repeat itself?

Some investors expect Powell to reiterate the Fed’s commitment to reducing inflation while acknowledging that progress has been made.

But they say the market is unlikely to react too dramatically this time because Powell’s speech will likely be similar to his commentary following recent policy meetings.

“Expect a balanced assessment without sudden hawkishness, but no task is accomplished: the central bank is far from ready to let inflation slip from its grasp,” Evercore ISI strategists wrote in a note on Tuesday.

Although it is not clear The central bank will raise interest rates again This year — Powell has signaled at least one more increase — Wall Street is embracing the end of the Fed’s aggressive rate hike campaign Inside Its visuals. This is a major difference from last year.

“Powell knew the Fed would have several more rate hikes in August 2022. Today, the Fed may be at the end of this hiking cycle. It should be more nuanced in his speech,” said Tom Graf, chief investment officer at Facet.

According to the CME FedWatch tool, traders see a roughly 85% chance the central bank will keep rates steady at its next meeting in September. Expectations on whether the central bank will hold off or raise rates later in the year are sharply divided, with a narrow majority for no change in November or December.

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