Daily Outlook

Stock futures slip as Wall Street awaits speech from Fed’s Powell

Futures contracts tied to the major U.S. stock indexes slipped during the overnight session Wednesday evening as Wall Street turned its attention to an upcoming address from Federal Reserve Chairman Jerome Powell.

Dow futures slipped 77 points, pointing to a lower open when regular equity trading resumes Thursday morning. S&P 500 and Nasdaq-100 futures were lower by 0.2%.

Thursday’s trading is likely to be driven in large part by comments from Fed Chair Jerome Powell, who is expected at 9:10 a.m. ET to introduce a new pandemic-era tool to combat the economic impact of Covid-19 and foster inflation in the U.S. The Fed’s annual symposium will be held virtually this year instead of the usual locale of Jackson Hole, Wyoming.

The central bank has for years tried to keep inflation at 2%, a rate of price increase that policymakers consider both manageable and indicative of a healthy economy. But ever since the financial crisis, inflation in the U.S. has more often than not lagged the Fed’s target.

Powell is expected to acknowledge that ongoing inflation shortfall and announce that the Fed will now have an “average inflation” target. Investors say that the move will allow the Fed to be more comfortable with inflation creeping above the 2% threshold so long as it’s eventually offset by periods of below-average price growth.

The prospect of continued stimulative policy could help push the major market indexes to new record highs, a feat both the Nasdaq Composite and S&P 500 clinched on Wednesday. A tech-led rally led the S&P 500 up 1% to 3,478.73 on Wednesday while the Nasdaq popped 1.7% to finish the day at 11,665.06.

Wednesday’s gains put the S&P 500 up more than 58% since hitting an intraday low on March 23. The Nasdaq has soared by 75% in that time period.

Economists polled by Dow Jones expect some 1 million workers filed initial claims last week. That would be a deceleration from the prior week’s print of 1.1 million first-time claims.

Stock futures slip as Wall Street awaits speech from Fed’s Powell, CNBC, Aug 27

Article Rating