Dow Jones, S&P 500 and Nasdaq futures are currently pointing to a higher open on Friday, with stocks likely to regain ground after trending lower over the past several sessions.
Traders may look to pick up stocks at somewhat reduced levels following the recent weakness, which has seen the S&P 500 close lower for five straight sessions.
However, early trading is likely to be impacted by reaction to Federal Reserve Chair Jerome Powell’s highly-anticipated speech at the Jackson Hole Economic Symposium later this morning.
Powell’s remarks could have a significant impact on the outlook for rates ahead of the Fed’s next monetary policy meeting in September.
Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, has predicted Powell will “keep his cards close to his vest” and emphasize that the Fed will need to see upcoming jobs and inflation data before making a determination whether or not to cut interest rates next month.
Ahead of Powell’s speech, CME Group’s FedWatch Tool is currently indicating a 71.3 percent chance the Fed will lower rates by a quarter point next month, down from 85.4 percent a week ago.
Stocks fluctuated early in the session on Thursday before mostly lower over the course of the trading day. The major averages all moved to the downside on the day, with the S&P 500 closing lower for the fifth consecutive session.
The major averages finished the day off their worst levels but still in negative territory. The S&P 500 slid 25.61 points or 0.4 percent to 6,370.17, the Nasdaq fell 75.55 points or 0.3 percent to 21,100.31 and the Dow declined 152.81 points or 0.3 percent to 44,785.50.
The weakness on Wall Street partly reflected lingering uncertainty about the outlook for interest rates ahead of Powell’s speech at the Jackson Hole Economic Symposium on Friday.
In an interview with CNBC, Kansas City Fed President Jeffrey Schmid expressed doubt about lowering interest rates in September, saying the central bank needs to “have very definitive data to be moving that policy rate.”
“In September, we’ll get around tables and we’ll collaborate and we’ll figure it out, but yeah, I think there’s a lot to be said between now and September,” he added.
A notable decrease by shares of Walmart (NYSE:WMT) also generated some negative sentiment, with the retail giant tumbling by 4.5 percent after reporting weaker than expected second quarter earnings.
On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits rose by much more than expected in the week ended August 16th.
The report said initial jobless claims climbed to 235,000, an increase of 11,000 from the previous week’s unrevised level of 224,000. Economists had expected jobless claims to inch up to 225,000. Retail stocks saw significant weakness amid the steep drop by Walmart, dragging the Dow Jones U.S. Retail Index (DOWI:DJUSRT) down by 1.2 percent.
Notable weakness was also visible among airline stocks, as reflected by the 1.0 percent loss posted by the NYSE Arca Airline Index.
On the other hand, gold stocks turned in a strong performance despite a decrease by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 2.0 percent to its highest closing level in over twelve years.
Oil service stocks also saw considerable strength amid a sharp increase by the price of crude oil, with the Philadelphia Oil Service Index (NASDAQI:OSX) climbing by 1.6 percent.