Mid-Week Market Minute 08.24.22

Global stocks suffered ahead of this week’s key Fed symposium in Jackson Hole, Wyoming. The S&P 500 was lower by about 2% mid-week, with stocks in technology and communications sectors amongst the worst performers. Energy was the only sector in positive territory for the week, as energy prices rallied following reports OPEC is considering cutting production. Meanwhile, the U.S. dollar has resumed a rally to new multi-decade highs, as the euro dropped below the widely followed dollar parity level. Following Russia’s invasion of Ukraine, the euro has fallen drastically against the dollar as investors worry about a potential recession in the eurozone amid record-high energy prices.

The Fed’s annual Jackson Hole Economic Policy Symposium is Friday and will open with a speech by Fed Chair Jerome Powell at 9 a.m. Central. Powell is expected to reiterate the case for slowing the pace of tightening laid out in his July news conference and the July minutes released last week. He likely is to balance that message by stressing the FOMC remains committed to bringing inflation down and upcoming policy decisions will depend on incoming data.

On the data front, durable goods orders were flat in July, against consensus expectations for an increase. However, durable goods orders ex-transportation, core capital goods orders, and core capital goods shipments all increased slightly more than expected. Pending home sales declined 1.0% in July, above consensus expectations for a 2.6% decline. For the rest of the week, personal income and outlays are due out on Friday. This report includes the PCE Price Index for July, which is the preferred measure of inflation used by the Fed. Expectations are for the headline PCE price index to fall from 6.8% in June to 6.3% for July, with the Core PCE Price Index expected to fall from 4.8% to 4.7%.

Source: GSAM, CNBC, JPMorgan

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