Cautious rise on Wall Street awaiting Powell

LAST UPDATE 20:15

The US market continues to search for direction today, with investors moving cautiously as the days approach for central banker Jay Powell’s speech at the Fed conference in Jackson Hole.

In particular, all three indices show small changes although they have stabilized in positive territory, with the technology giants trying to give a boost to transactions.

THE Dow Jones located at 32,946 units with +0.01%The S&P 500 at 4,139 units with +0.25% and Nasdaq at 12,450 units with +0.5%.

The Dow and S&P 500 were down for a third session in a row yesterday, albeit on relatively limited volume, and the tech-weighted Nasdaq Composite finished around unchanged, with upward momentum clearly showing that it has weakened.

Tellingly, after rallying over 9% in July, the S&P 500 is essentially unchanged for the month.

A catalyst for the market’s next move is likely to be the Fed’s annual three-day conference in Jackson Hole, Wyoming, which begins tomorrow Thursday, while central banker Jay Powell’s speech is scheduled for Friday.

The bullish reaction in July was largely based on the majority of investors’ interpretation of Powell’s statements after the latest giant rate hike of 75 basis points, that the Fed intends to slow down its monetary policy tightening.

After all, in recent weeks bets on Fed rate futures have been swinging between the possibility of another brutal 75 basis point hike or a softer 50bp.

“Markets will remain in cloudy waters until Powell’s speech in Jackson Hole on Friday,” said Edward Moya, senior analyst at Oanda.

According to him, the central banker “may struggle to convince markets that he is comfortable with tightening policy that will cause a recession. The economy is clearly slowing, but it is still too early for the Fed to signal that it is less aggressive in its politics”.

For his part, renowned economist Mohamed El Erian said yesterday that Jerome Powell has an opportunity to bring investors on board with the Fed’s agenda to reduce inflation.

“Chairman Powell has two choices: either he’s going to let this disconnect continue, or he’s going to try to fix it. And if he tries to fix it, he’s either going to defy the market’s expectations, or he’s going to admit that the market is right because he’s going to we have a significant economic slowdown. It’s up to him,” he said.

Elsewhere, as mentioned above, the cap giants are at the helm of the session today, with Tesla up over 1.5%, while Netflix and Zoom jump over 3.5%.

Amazon is up +0.8%, while Peloton, which announced that it has reached an agreement with the global e-commerce giant to sell its products from its platform, sees its stock rally 20%.

Meanwhile, Bed Bath & Beyond, which has emerged as the new favorite meme stock, is jumping 14% today after a WSJ report that it secured financing.

At the top of the Dow Jones are Salesforce and Boeing with gains of more than 2%, while high-caps are under pressure from Dow Inc with losses of 2.1% and Walgreens Boots Alliance with 1.9%.

Finally, in macro news for the day, new orders for capital goods in the US rose in July, albeit at a slower pace than in previous months.

Specifically, orders for capital goods, excluding aircraft, rose 0.4 percent in July, after rising 0.9 percent in June, according to government data. The average estimate of analysts in a Reuters poll was for a 0.3% increase in July.

Durable goods orders were unchanged in July from the previous month, defying analysts who had expected them to ease.