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Winning Streaks End While Waiting for Jackson Hole Comments

Winning Streaks End While Waiting for Jackson Hole Comments

This story originally appeared on Zacks

After grinding higher and setting new records over the past several sessions, stocks finally took a break on Thursday as investors wait to hear what Fed Chair Jerome Powell has to say at this year’s (virtual) Jackson Hole meeting.

The NASDAQ slipped 0.64% (or about 96 points) today to 14,945.81, while the S&P was off 0.58% to 4470. These declines snap five-day winning streaks and also end three consecutive days of record highs for the former index and two for the latter. The Dow’s four-day run ended as well with a decline of 0.54% (or about 192 points) to 35,213.12.

We won’t have long to wait for Mr. Powell’s comments, as he’s scheduled to speak tomorrow morning shortly after the open. However, several Fed hawks were out today talking about the need to taper sooner rather than later, which probably curtailed any desire for already skittish investors to buy. The Chair is not expected to be as strident in his comments tomorrow. In fact, many of the editors don’t expect him to make much news at all.

“The markets appear to be preparing for the possibility of a policy shifting announcement (aka a tapering timeline). I don't see this as a very likely event, at least not until we see that the Delta-dent hasn't impacted the jobs market in August (the August jobs report will be released next Friday),” said Dan Laboe in Headline Trader. “Still, the symposium could be market moving considering the global elements involved (Center Bankers from around the world are attending)."

And of course, investors were feeling horrible about the devasting news that 12 U.S. service members were killed in a pair of suicide bombings near the Kabul airport in Afghanistan.

Meanwhile, jobless claims were… OK. The print came to 353,000 for last week, which is still pretty low for these difficult times but did technically miss the expectation of only 350K. Plus, it was slightly worse than the previous week, which means we’ve come off the pandemic-era low.  

Likewise, the second revision of domestic GDP in the second quarter came to 6.6%, which was 0.1% better than the previous report and suggests a 0.3% improvement over the first quarter. However, it was a little less than expected.

Stocks are in positive territory for the week heading into Friday’s session, but Mr. Powell’s comments could be the deciding factor. The editors didn't make any moves on Thursday with so much uncertainty in the air, so here's some analysis to hold you over until tomorrow.

Today's Portfolio Highlights:

ETF Investor: “Investors are now focused on comments expected from Federal Reserve Chair Powell and other officials on Friday at the important Jackson Hole summit that is being held virtually again this year. This morning, three Fed officials told CNBC that the Fed should start its tapering process soon.

“St. Louis Fed President James Bullard cited evidence the massive bond purchases have started to create bubbles in the housing market. Kansas City Fed President Esther George also said tapering appears appropriate given the progress we’ve seen. Dallas Federal Reserve President Robert Kaplan said he is worried about inflation as well as financial market imbalances.

“Jobless claims ticked up to 353,000 from the previous week’s 349,000. While they were slightly worse than the 350,000 consensus estimate, they remained close to post-pandemic lows.”
– Neena Mishra

Income Investor: "Stocks fell from their records on Thursday as investors anxiously await the minutes from the Fed’s annual summit in Jackson Hole tomorrow.

"Clarity on the central bank’s plans to pull back on monetary stimulus will be the hot topic. Many experts who’ve already made comments agree that the tapering of bond purchases is becoming a more appropriate action based on the economic progress we’ve seen so far.

"Of course, the pace of tapering, and when it will start—this is important since nailing the timing could prevent the economy from overheating—will be the key factors driving the stock market, as well as how we all will approach investing and managing our portfolios.

"Another thing to keep watch for tomorrow will be any comments on timing for interest rate hikes."
-- Maddy Johnson

All the Best,

Jim Giaquinto

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