Stock futures gained Friday morning to shake off losses from a day earlier, as traders looked ahead to a key speech from Federal Reserve Chair Jerome Powell.
Contracts on the S&P 500 ticked up. On Thursday, the index closed lower to end a five-session winning streak and pull back from an all-time high. Dow and Nasdaq futures also moved higher.
More hawkish commentary from Fed policymakers ahead of the central bank’s key Jackson Hole symposium on Friday knocked stocks from their upward trajectory earlier this week, and compounded with concerns over the crisis in Afghanistan after explosions at the Kabul airport injured and killed U.S. service members.
Federal Reserve Bank of Kansas City President Esther George told Yahoo Finance’s Brian Cheung she would prefer to begin removing monetary policy accommodation and begin tapering asset purchases “sooner rather than later” as the economy continues to recover. George serves as an alternate voting member of the Federal Open Market Committee this year, and will be a voting member next year.
Federal Reserve Chair Jerome Powell’s Jackson Hole speech on Friday is set to provide a fuller picture of the central bank leader’s thinking about the pace of the economic recovery in light of the latest Delta variant threat. Despite comments from more hawkish Fed officials lately, Powell’s remarks have to date been more dovish, suggesting he was more inclined to wait to see the further progress made in the economy before adjusting policy.
“We’re not expecting a formal definitive announcement tomorrow, given the deterioration in the macro landscape since that July meeting, when the taper debate really unfolded,” Candice Bangsund, Fiera Capital Global Asset Allocation vice president and portfolio manager, told Yahoo Finance.
“Obviously, the Delta variant [is] a major downside risk bringing into question the outlook for the economy, and clouding the outlook,” Bangsund added. “So we think this will see Chair Powell tomorrow take somewhat of a cautious and patient approach – not providing that definitive guidance, but laying the groundwork for an eventual taper later this year once the Fed can get a little bit more of a sense as to the economic outlook, given these developments on the COVID front.”
Even given Thursday’s pullback, the S&P 500 has managed to hold near all-time highs, boosted by a bevy of stronger-than-expected second-quarter earnings results, solid economic data, and still-accommodative policies from the Fed. The index has so far risen 19% for the year-to-date, and is on track for a nearly 2% gain in August.
“One has to be careful about focusing on issues over the short term over volatility and really getting swayed from making proper long-term decision,” Steven Wieting, Citi Global Wealth chief investment strategist, told Yahoo Finance. “Generally speaking, for example, a market that’s fallen 20% is going to generate higher returns than a market that’s rallied 20%. And this conundrum is always with us: We really feel better about markets that have performed well … but they’re really areas where you have to really reestimate what the future returns will look like.”
8:30 a.m. ET: Personal income rises by the most since March in July, while spending slows
U.S. personal income rose at the fastest pace in four months in July, reflecting both the broadening pick-up in economic activity as more vaccinations took place, and increased government benefits as new advance Child Tax Credit payments came into effect.
Income increased 1.1% in July compared to June, the Bureau of Economic Analysis said Friday morning. This was a stronger rise than the 0.3% increase expected, and accelerated from June’s 0.2% monthly pace.
Personal spending, meanwhile, slowed to a just 0.3% clip in July, decelerating from June’s 1.1% advance.
The personal saving rate ticked up to 9.6% from June’s 9.4%. This level has come down from a peak of more than 33% in April 2020, but remains elevated compared to pre-pandemic levels.
7:15 a.m. ET Friday: Stock futures gain as traders await Powell
Here were the main moves in markets as of 7:15 a.m. ET:
S&P 500 futures (ES=F): +12.5 points (+0.29%) at 4,479.25
Dow futures (YM=F): +79 points (+0.22%) to 35,239.00
Nasdaq futures (NQ=F): +51 points (+0.33%) to 15,325.74
Crude (CL=F): +$1.06 (+1.57%) to $68.48 a barrel
Gold (GC=F): +$0.40 (+0.02%) to $1,795.00 per ounce
10-year Treasury (^TNX): unchanged, yielding 1.344%
6:38 p.m. ET Thursday: Stock futures edge up
Here’s where markets were trading Thursday evening:
S&P 500 futures (ES=F): +3.5 points (+0.08%) at 4,470.00
Dow futures (YM=F): +28 points (+0.08%) to 35,188.00
Nasdaq futures (NQ=F): +13.25 points (+0.09%) to 15,288.00
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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