Here’s what’s next for stocks after Powell’s Jackson Hole speech

Here’s what’s next for stocks after Powell’s Jackson Hole speech

It’s easy to go back into a defensive crouch. “The market is about to enter the seasonally weak month of September with the Federal Reserve amping up inflation fighting rhetoric,” technical advisory service Lowry said in a note to clients over the weekend. Still, let’s wait for two events: the economic data and the conferences. Federal Reserve Chairman Jerome Powell says he is expecting a “softening of labor conditions” and there will be ample opportunity to see how soft the jobs market is when the August jobs report comes out on Friday (expected to be 325,000, from 528,000 in July). We’ll have to wait a little longer for another read on inflation. Powell said lower inflation readings recently were “welcome” but are “far short of what the committee will need to see before we are confident that inflation is moving down.” The consumer price index for August is not out until Sept. 13 (the last reading for July was up 8.5% year over year ). After that, the Federal Open Market Committee meets on Sept. 21 to weigh the data. Unfortunately, the modest progress the U.S. appears to be making on inflation is not being echoed in Europe Eurozone inflation is out Wednesday, and it’s expected to hit a new high of 9.0% year over year. It’s been going nowhere but up since January 2021, and as everyone knows gas prices are going nowhere but up. The only good news: Germany is making real progress on increasing its natural gas supplies. European Central Bank officials are also talking about 75 basis point hikes after delivering a 50 basis point hike on July 21, their first rate hike in 11 years. The big issue for stock watchers will be earnings, still positive for the year but coming down. Most earnings commentary was given in in mid-to-end of July, but a lot has potentially changed since then. We may get significant updates on third- and fourth-quarter trends at the upcoming sell-side conferences that kick off right after Labor Day. September is the big month for these sell-side conferences, with hundreds of companies presenting at events highlighting health care, technology, media, telecom, and consumer staples These conferences traditionally kick off right after Labor Day. They include the Barclays Global Consumer Staples Conference (Sept. 6-8), where companies including General Mills, Smucker, Colgate-Palmolive and Hormel will present; the Evercore ISI Technology, Media and Telecom Conference (Sept. 7), where companies such as General Motors and ServiceNow will present; the Wells Fargo Healthcare Conference (Sept. 7-9), where Johnson & Johnson, Regeneron, and Becton-Dickinson will present; and the Citi Global Technology Conference (Sept. 7-9), where companies including Snowflake and Juniper Networks will present. Chevron will present at the Barclays CEO Energy-Power Conference Sept. 7. There’s also a Goldman Sachs Retailing Conference Sept. 7-8 where Ulta Beauty, Macy’s, Urban Outfitters and Tractor Supply will present. That’s just the beginning of September. There are many more conferences in the second half. There’s also a large crop of company Investor Days in September, including Starbucks (Sept. 13), Humana (Sept. 15), Ralph Lauren (Sept. 19), Salesforce (Sept. 21), Qualcomm (Sept. 22) and Intuit (Sept. 29). Finally, as bad as Friday was, keep it in perspective. While we’re waiting for the data and the conferences to start, it’s important to remember that we are a long way from the bottom. Even with big drops on Friday, all the major indices are still substantially up for this quarter. Major indices in Q3: Russell 2000 up 11% Dow transports up 9% Nasdaq 100 up 10% S & P 500 up 7%

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