The S&P 500 is retreating to key levels before Fed Chair Powell’s speech at the Jackson Hole Symposium. Traders are likely reducing positions and hedging due to hotter-than-expected US PPI, improving jobless claims, and surprising inflation expectations from the UMich survey.
Prior to recent data, the S&P 500 benefited from the US CPI report aligning with forecasts. However, the anticipation of something hawkish from Powell’s speech has shifted market sentiment, causing a pullback as traders react to potential rate discussions.
Possible Rate Decisions
Powell might not commit to specific actions, deciding based on comprehensive data. A signal of a possible rate cut in September could spur a rally, as traders unwind hedges. Conversely, a statement limiting September rate cut prospects might cause further stock market declines.
On the daily chart, the S&P 500 failed to maintain its rally above a previous high, descending toward a major trendline at the 6,380 level. Buyers might enter below this trendline, while sellers focus on a further pullback toward 6,241. On the 1-hour chart, a minor downward trendline indicates bearish momentum, with sellers poised for new lows and buyers seeking a breakout.
Upcoming Events
Upcoming events include speeches by Fed’s Waller, FOMC meeting minutes, US PMIs, jobless claims, and Powell’s speech.
