Like we talked about last week, the market’s reliance on the word of the Fed at the moment is making today very important. Fed officials will meet at Jackson Hole, Wyoming for their annual meeting and retreat to discuss policy and the current state of the economy, two things that are very important to investors. This will be the first in-person retreat since before the pandemic, and Fed officials must be very careful on what they say as anything will be scrutinized.
These meetings often give a brief oversight as to what the Fed’s next move will be, which is next month in September. For the last week or so, markets have moved mainly due to anticipation of what’s going to happen today, but the last few days have been positive ahead of the final day. The S&P 500 is up more than 1.5 percent in the last 2 days, and economists are confused on why this is occurring. The general consensus is that the Fed will acknowledge the recent economic data as mildly weak, and they expect markets to become more volatile after Powell’s speech in the morning despite the buildup. Investors will be looking for any hints that point to either a half-percentage point raise or a three-fourths percentage point raise, and the markets could become a happy place or a nasty one depending on what could only be a few words.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.