Jackson Hole Conference - How it will Impact the Stock Market
Investors are getting ready for the annual kickoff of The Jackson Hole Economic Symposium this week, which is set to be focused on “Reassessing the Effectiveness and Transmission of Monetary Policy.” Central bank leaders from across the globe will attend this meeting, but the biggest focus for American investors will be on what Fed Chair Jerome Powell will say. Powell is expected to address the vast array of headwinds the economy has faced in 2024, especially The Fed’s approach to monetary policy.
Just earlier this month, we saw markets nosedive after recession fears resurfaced, which was a result of a rise in unemployment. Strict monetary policy has led to millions of layoffs, bringing the U.S. unemployment rate to 4.3%. The rise in unemployment was already expected by The Fed, but the sudden month over month jump took investors by surprise and reintroduced the idea of a recession. This meeting will be a chance for The Fed to show that everything is still “under control,” and they can address the mixed signals from the economy.
The Fed have gone back and forth many times on interest rate cuts this year, and its made investors lose faith in their guidance, but with inflation now below 3%, investors are expecting Powell to reinforce a rate cut in September, which will also restore faith in the policy narrative.
Stock Market Outlook:
Jerome Powell realizes that the stock market rally from the August “flash crash” is still fragile. Investors are still looking for any sign to sell, but there are also many investors who don’t want to miss a chance to see another all time high. No “new” information will be introduced, and Powell is not usually one to surprise anyone, so we expect the market to react positively. Chances are, he will celebrate the latest CPI reading of 2.9%, and he will speak positively about the labor market’s strength, helping restore faith for investors.