The investing world will turn its attention to northwestern Wyoming in the week ahead, with Federal Reserve Chair Jerome Powell set to give his most important policy speech of the year on Friday at the annual Jackson Hole Economic Symposium.
Held each year at the Jackson Lake Lodge in Grand Teton National Park, the Kansas City Fed's annual meeting often serves as a crucial set piece in the Fed chair's calendar that signals key shifts in the central bank's thinking.
Ahead of Powell's speech — likely to be his last as Fed chair — markets are placing the probability the Fed will cut rates by at least 0.25% next month at around 85%. Clues from Powell about the speed and depth of the cycle the Fed is about to embark on will be the week's biggest market-moving event.
On the corporate calendar, results from Walmart (WMT), Target (TGT), and Home Depot (HD) highlight a slowing earnings schedule that sees the retail sector remain the key focus.
And the economic data flow will be slow this week, with Thursday's updates on initial jobless claims and service sector activity the top highlights.
Investors may also keep a closer eye than usual on the minutes from the Fed's July 30-31 meeting released Wednesday, which could offer more color on the decision from Fed governors Waller and Bowman to vote against the central bank's decision to keep rates unchanged in a range of 4.25%-4.50% last month.
One more for the road
In 2018, Jerome Powell addressed the Jackson Hole symposium for the first time as Fed chair, outlining his views on the key variables that central bankers wrestle with, elucidating his non-economist's view on the most technical aspects of monetary policy.
In the intervening seven years, Powell has proven himself to be more of a pragmatist than a theoretician as he navigated 2018's false start on rate hikes, the COVID pandemic, the 2022 inflation shock, and the still-incomplete rate-cutting cycle that kicked off over a year ago.
"The time has come for policy to adjust," Powell said last August.
Rate cuts from the Fed in September, November, and December of last year have been on pause since. Growing dissent among his colleagues on the FOMC — and months of more forceful commentary from the White House — has seen Powell end up right where he stood a year ago.
In his 2018 speech, Powell spoke at length about Alan Greenspan's decisions in the mid-90s to hold off on rate hikes, lauding the former Fed chair's "wait and see" approach and foretelling a preference to wait that has defined much of Powell's tenure.
"Given what the economy has shown us over the past 15 years, the need for the sort of risk‑management approach that originated in the new-economy era is clearer than ever before," Powell said at the time. Barring the Fed's quick actions in March 2020, this line explains much of Powell's approach.
As Powell gets set to end his time leading the Fed, the president has bestowed on him a nickname: "Too Late."
"The diversity of views on the FOMC is one of the great virtues of our system," Powell said. "Despite differing views on these questions and others, we have a long institutional tradition of finding common ground in coalescing around a policy stance."
In a year, a new Fed chair will address the crowd at Jackson Hole. Interest rates will likely be lower. But how this new chair views these tenets of central banking will be the more important answer for the future of the Federal Reserve.
Retail's tale
Retail sales rose 0.5% in July following a 0.9% jump in June.
Economic data indicates US consumer spending has stabilized after tariff-related surprises this spring. How this information comes through in earnings reports scheduled for the week ahead will be one of the week's defining themes.
Walmart's results Thursday morning, given the retailer's sheer size, will offer the broadest canvas for investors to work from.
The company said in May that consumers remained "choiceful," with the company seeing growth across all income cohorts. Three months later, any signs of more confident spending will be welcomed by investors.
Wall Street expects its US same-store sales rose 4% in its fiscal second quarter, according to Bloomberg data. In its fiscal first quarter, same-store sales rose 4.5% in the US. Walmart stock has gained over 10% this year, outperforming the S&P 500 by roughly a percentage point.
At Target, questions over the company's leadership loom with shares of the retailer down over 20% this year. Home Depot, meanwhile, is navigating a US housing market some commentators have said is in recession, though interest rates have pointed to potential signs of a thaw in the coming months.
Single-stock stories always stand at the ready to push around markets. Earnings from Nvidia on Aug. 27 will be another in this genre.
But last week's market action showed investors starting to move past the daily headlines in an indication of a market finding firmer footing.
"The bull market for stocks continued this week, and we’ve even seen some rotation out of the year’s biggest winners into beaten down laggards like Health Care and homebuilders," Bespoke Investment Group wrote in its weekly letter to clients.
"When momentum names stall or sell-off, it can really hit the major indices hard if no other areas of the market are there to pick up the slack, but this week, the year’s worst performers finally saw some buying interest as investors rotated across the market instead of out of it."
Like most things in modern life, the stock market story remains defined by easily digestible ideas like "Sell America" or acronymic memes like TACO. But the S&P 500 hit a record high this week. Twice. The absence of euphoric feelings from the investor class is another way to stamp this rally with a clean bill of health.
And while the market has been driven by Big Tech and the AI trade, this week's market rotation shows investors acting on another one of the society's defining themes in 2025 — everybody gets a turn.
source: finance.yahoo.com
