Wake Up Wall Street (SPY) (QQQ): Finally, Powell can get us out of this hole

Ivan Brian FXStreet

Here is what you need to know on Friday, August 26:

Equity markets will finally get some clarity on the next move in interest rates when Fed Chair Jerome Powell takes to the pulpit on Friday. Recent commentary from fellow board members has turned hawkish, but this did not dent equity enthusiasm on Thursday. All major indices closed in the green with the Nasdaq adding nearly 2%. This speaks to a return of risk appetites, but Powell will need to update markets to allow this rally to continue.

Equity positioning remains light, and hedge funds are now net short, according to the latest data. That could set up another leg up in this rally. The bearishness has been all permeating this year, but so far the US economy has held up reasonably well. Employment remains strong, but there are some worrying signs in housing and recent PMI data. Is this the start of something worse than just a natural cooling? After all the housing market has been unsustainably strong post-pandemic, and with interest rates rising that was never going to continue. Forward interest rates though continue to be predicted upwards, which will impact long-term and large investment houses' decision-making.

Thursday's moves were in effect a bit of corrective positioning based on recent over-hawkish commentary from Fed members. It is unlikely Powell will tilt noticeably hawkish, given there is a lot of important data between here and September. He will most likely stick to his data dependant view, but may have a slightly hawkish tilt further out the curve with some talk of higher rates for longer in 2023. With Thursday GDP data being revised up, that has lessened predictions for a Q1 2023 interest rate cut.

The dollar is also on hold and the dollar index is at 108.25, while oil is at $94. Gold is at $1,746, while Bitcoin waits for a risk tone and is still at $21,100.

See forex today

European markets are lower: Eurostoxx -0.7%, FTSE -0.2% and Dax -0.4%.

US futures are also lower: S&P -0.3$, Nasdaq -0.4%, and Dow -0.2%

Wall Street top news (QQQ) (SPY)

Powell to speak at 10:00 EST/15:00 London.

Bridgewater CIO Greg Jensen says stocks and bonds could fall another 25%.

Vinco Ventures (BBIG) announces new co-CEO.

Farfetch (FTCH) up on earnings.

Affirm (AFRM) down 13% on earnings.

Workday (WDAY) up 10% premarket on guidance being maintained.

Seagen (SGEN) down on Bloomberg report that talks with Merch stalled.

ZIM Shipping (ZIM) is down 10% after going ex-dividend.

GAP up 6% premarket on earnings.

DELL down on earnings, price target cut at Goldman.

Jinko Solar (JNKO) up on earnings.

Ulta Beauty (ULTA) raises guidance, shares up 3% premarket.

Upgrades and downgrades

Source: WSJ.com

Economic releases

Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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