U.S. stocks halt losses as Fed chief's speech awaited

U.S. stocks interrupted a series of declines this week: after the opening of main trading on Friday, the broad market index S&P 500 rose 0.3%, and the index of "blue chips" - by 0.6%. Investors are waiting for Fed chief Jerome Powell's speech at the Jackson Hole Economic Forum, which could prompt further rate rhetoric from the regulator.

- The main U.S. stock index S&P 500 rose 0.3% in early trading on August 22 after declining for five consecutive trading sessions.

- The blue-chip index Dow Jones Industrial Average jumped 0.6%.

- The Nasdaq Composite index was little changed from its closing level a day earlier.

- The VIX index, also called the Wall Street Fear Index, was down 0.8%.

Investors are waiting for Jerome Powell's speech at the economic forum in Jackson Hole, trying to understand whether the Fed will remain cautious amid persistent inflation or take a step toward easing in the labor market, notes Bloomberg. Additional pressure is created by calls from Donald Trump's administration to lower rates and growing disagreements within the Fed committee, the publication adds. In July, the regulator kept the rate, but for the first time since 1993, two members of the Fed's Board of Governors opposed the overall decision. To leave himself room to maneuver, Powell is likely to stress that the September decision will depend on fresh data on employment and inflation, which will be published at the beginning of the month, suggests Bloomberg.

Market participants have adjusted expectations for the September Fed meeting: according to CME FedWatch, a tool for monitoring market expectations for U.S. Fed decisions, traders now estimate the probability of a rate cut next month at 69.5% and lay less than two rate cuts for the entire year. Just over a week ago, players were expecting a full-blown quarter-point cut in September, with some even betting on a half-point cut, Bloomberg emphasized.

"If the Fed doesn't cut rates in September, markets will fall because they expect it to act. If it cuts too much, markets could take it as a signal that the Fed is losing its independence, which could cause much higher inflation," Panmure Liberum strategist Joachim Clement said in a Bloomberg statement.

"Core inflation remains stubbornly high and the labor market, while showing some signs of cooling, clearly does not require emergency action," said Convera strategist Kevin Ford. - It is this inconsistency that makes Powell's speech a high-stakes event."

Powell's speech in Jackson Hole is scheduled to begin a half hour after the market opens.

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