The S&P is expected to open 4 points lower

Good morning,

It appears that US indices are once again lacking any kind of momentum at the record high levels they find themselves back at. The S&P broke to new highs on Thursday for the first time in almost a month, following a brief correction that many feared was the beginning of the broader sell-off that so many have predicted this year.

The lack of momentum at this level may not necessarily be investors getting a cold feet though. Firstly, it’s natural to see some profit taking at a previous high, especially when it comes at the end of the week following a four day rally. More importantly, these levels have been reached the day before Janet Yellen’s key note speech a Jackson Hole, an event her predecessor Ben Bernanke often liked to drop a bombshell at.

Of course, this doesn’t automatically mean that Yellen will do the same. In fact, I think she will stick to the same dovish rhetoric that we’ve become accustomed to, focusing on slack in the economy rather than rate hikes. I’m sure this will please the group of protestors that have turned up to the event to protest against a rate hike. That said, investors are unlikely to take the risk so I expect to see more fence sitting as the day goes on.

We’ll also hear from Mario Draghi at Jackson Hole which could also shake things up in the markets. Again though, I don’t expect him to drop any bombshells as the ECB has only recently announced a new stimulus package and it will take time for it to feed into the economy. Draghi may give his usual spiel about the ECB being ready to act if necessary but I don’t expect investors to pay much attention to this.

Ahead of the opening bell on Wall Street, the S&P is expected to open 4 points lower, the Dow 35 points lower and the Nasdaq 8 points lower.