This morning in New York: Powell's Jackson Hole speech is in focus

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The key event for the markets this Friday will be Fed Chairman Jerome Powell's speech at the Jackson Hole Economic Symposium. It will start half an hour after the opening of the main trading session, and the text of the speech will be published on the Fed's website at the same time. There will be no question-and-answer session in this format.

The focus will be on Powell's statements on the outlook for monetary policy in the context of cooling labor market and ambiguous inflation dynamics. Although the rate cut by 25 bps in September is largely embedded in the quotes, the Fed's rhetoric is likely to be extremely cautious, focusing on the need to maintain flexibility and careful analysis of inflation and employment data for August, which will be released only in early September. In addition, Powell is expected to present the results of the internal review of the Fed's strategy: it is likely to abandon the concept of medium targeting with a return to the traditional 2% inflation target.

In general, uncertainty in the markets remains elevated. Recent "hawkish" comments of the Fed's management representatives create a ground for revision of expectations. Under such conditions, any deviations from Powell's neutral rhetoric or hints that a decision on rate adjustment in September has not been made yet may provoke a sharp negative reaction of stock exchange players. At the same time, risk appetite has weakened this week, and shares of a number of companies popular with retail investors have corrected. In this regard, even the absence of negative surprises in Powell's speech may become a reason to buy out the drawdown.

BJ's Wholesale Club (BJ) will present quarterly reports before the opening of the main session. No significant reports are scheduled after the closing of the main trading session.

Futures on US indices show about zero dynamics in anticipation of Powell's speech. We assess the balance of risks for the upcoming trades as neutral with increased volatility. We focus on the S&P 500 fluctuations in the range of 6260-6470 points (from -1.8% to +1.5% of the previous session's closing level).

- Zoom Communications (ZM) shares rose after the company released a quarterly report that exceeded expectations. The company's revenue increased by 5% YoY to $1.22 bln, while adjusted EPS amounted to $1.53. Management raised its full-year guidance for these figures to $4.83-4.84 bln and $5.81-5.84, respectively. The results were supported by stronger corporate demand and the introduction of AI tools, which increased the attractiveness of the platform in the context of business transition to a hybrid format of work.

- Ross Stores (ROST) shares reacted positively to its quarterly earnings report. The company's EPS exceeded forecasts and reached $1.56, although revenue slightly underperformed the average expectations and amounted to $5.53 bln. Investors positively perceived the return of the earnings guidance, which was previously withdrawn due to uncertainty with tariffs. Additional support was provided by higher sales ahead of the school year and improved expectations for the pre-holiday quarter.

- Intuit (INTU) reported fiscal Q4 revenue growth of 20% YoY to $3.83 billion and adjusted EPS of $2.75. However, a weak outlook for the next three months disappointed investors and caused the stock to decline. Management expects deteriorating results in Mailchimp division due to product issues and customer churn among small businesses.

- Workday's (WDAY) revenue for the reported quarter rose 13% YoY to $2.35 bln, while adjusted EPS reached $2.21. However, the quotes were pressured by the quarterly subscription revenue guideline of $2.24 bln, which matched the consensus. The annual guidance was raised slightly, while the announcement of the acquisition of AI startup Paradox failed to offset the market's disappointment with the growth prospects.

- Nvidia's (NVDA) suppliers Amkor Technology and Samsung Electronics have been ordered to suspend work on the H20 AI chip developed for the Chinese market, as Chinese authorities recommend local companies refrain from using the product for security reasons. Nvidia (NVDA) shares are moderately declining in the premarket.

August 21 trading on the U.S. markets was the fifth consecutive session, which ended mostly in the negative. S&P 500 decreased by 0.4%, Dow Jones fell by 0.34%, Nasdaq 100 lost 0.46%. At the same time Russell 2000 rose by 0.21%. This dynamics was determined by hawkish comments of the Fed representatives and a block of contradictory macro data, which indicated the risks of stagflation.

The energy sector (XLE: +0.69%) was the leader of the growth due to higher oil prices. Manufacturers of consumer staples (XLP: -0.90%) were the outsiders due to the ambiguous reporting of Walmart (WMT).

Macroeconomic statistics published during the day were contradictory, which increased the anxiety of the investment community.

Preliminary PMI estimates for August and data on sales in the secondary housing market exceeded expectations. At the same time, the number of initial and repeated applications for unemployment benefits was higher than expected, and the business activity index from FRB Philadelphia unexpectedly went down. Investors were most concerned about the component of prices paid in both reports, which reached the highest levels since 2022, confirming inflationary pressures caused by the White House's tariff policy.

Against this background, the comments of the Fed representatives were of a pronounced "hawkish" nature. The head of FRB Kansas City Jeffrey Schmid (voting member of the Board of Governors) said that he did not see the need to urgently reduce rates. His Cleveland counterpart Beth Hammack agreed with him. As a result, the market revised its estimate of the probability of a rate cut in September from 82% to 71%, and investors began to put less intensive easing of monetary policy in prices before the end of the year.

The U.S. and the EU have published details of a framework agreement, setting a base tariff of 15% on most European goods and securing commitments to reduce duties on industrial and agricultural goods. This news reduces the risks of an escalation of the trade war with the EU.

- Walmart (WMT: -4.5%) reported second-quarter EPS below consensus, which put pressure on the retailer's stock, although comparable sales in the U.S. and online sales showed strong growth and the full-year forecast was raised. An additional negative was management's warning about the impact of import tariffs on the activity of low-income consumers.

- News of a $12.3 billion private fund buyout of Thoma Bravo for $12.3 billion in cash at a 32% premium to the Aug. 15 price target was a growth driver for Dayforce (DAY: +2.4%).

- Coty's (COTY: -21.6%) weak fiscal fourth-quarter results, in which earnings came in below expectations, and a cautious outlook pointing to continued margin pressure in the first half of 2026 due to tariffs and increased competition, led to a collapse in the cosmetics company's stock price.

- The strategic change, in which the company is selling its pulp fiber business for $1.5 billion and closing its Georgia manufacturing facilities, supported International Paper (IP: +2.2%) shares.

This article was AI-translated and verified by a human editor