Stocks pause ahead of Jackson Hole symposium

Stocks posted small moves after last week’s risk-on rally as traders await signs on the scope of potential interest-rate cuts from the Federal Reserve. The yen rallied against the dollar.

Contracts on the tech-heavy Nasdaq 100 slipped 0.3% while those on S&P 500 were little changed. Shares in European defense firms including Rheinmetall AG tumbled after a report that Germany will no longer grant new requests for aid to Ukraine as the government seeks to rein in spending. 

Traders are starting the week on a cautious footing after recovering risk appetite last week left the S&P 500 close to a record high. After the Aug. 5 swoon, some buyers are re-emerging to help the main US stock gauge recoup more than half its summer losses.

“Things have come back, things feel more measured now,” Louise Dudley, portfolio manager for global equities at Federated Hermes, said in an interview with Bloomberg TV. “In that medium term there is some volatility and we’re definitely looking to take advantage of some of those price moves. Some of the large-cap cap names are still offering some of the top-growth opportunities.” 

The key event is slated for Friday, when Fed Chair Jerome Powell is expected to give fresh insights on the course of US monetary policy at the central bank’s Jackson Hole economic symposium in Wyoming.

“We expect Powell to hold forth on the medium-term strategy for the Fed,” Seth Carpenter, chief global economist at Morgan Stanley, wrote. 

Goldman Sachs at the weekend trimmed the probability of a US recession in the next year to 20% from 25%, citing last week’s retail sales and jobless claims data. If the August jobs report set for release on Sept. 6 “looks reasonably good, we would probably cut our recession probability back to 15%,” Goldman economists led by Jan Hatzius wrote in a report to clients on Saturday.

Yen Gains

In Asia, the yen led gains among Group-of-10 currencies as markets await hints on Aug. 23 from Bank of Japan Governor Kazuo Ueda, who is scheduled to attend a special session at parliament this week to discuss last month’s rate hike, which roiled global markets.

Large investors, such as Vanguard, are still betting on more interest rate hikes in Japan in the coming months, even after a sharp decline in market pricing for more tightening this year. The yen rose for a second session on Monday to trade at around 145 per dollar, as the nation’s equities fell for the first time in six days.In Asia, me

Oil declined for the fourth time in five sessions as traders tracked US-led efforts to secure a cease-fire in the 10-month old conflict in Gaza, while the Russia-Ukraine war is escalating. 

Here’s what’s coming up: 

• US Democratic National Convention takes place Aug. 22, Monday
• Start of annual US-South Korea joint military exercise, Monday
• China loan prime rates, Canada and euro area CPI, Tuesday
• Sweden and Turkey interest rate decisions, Tuesday
• Indonesia and Thailand interest rate decisions, Wednesday
• US FOMC minutes of of July 30-31 policy meeting, BLS preliminary annual payrolls revision, Wednesday
• European Central Bank Governing Council member Fabio Panetta speaks in Rimini, Wednesday
• South Korea central bank rate decision, Thursday
• US Vice President Kamala Harris delivers acceptance speech on the final night of Democratic National Convention, Thursday
• Mexico’s central bank, National Bank of Poland issues monetary policy minutes
• Malaysia CPI data, while Mexico and Norway publish GDP data
• Japan CPI data due, and Bank of Japan Governor Kazuo Ueda to attend special session at Japan’s parliament to discuss July 31 rate hike, Friday
• Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey speak at Kansas City Fed’s annual Jackson Hole symposium, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 5:16 a.m. New York time
• Nasdaq 100 futures fell 0.3%
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 rose 0.1%
• The MSCI World Index rose 0.1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%
• The euro was little changed at $1.1036
• The British pound rose 0.1% to $1.2963
• The Japanese yen rose 1% to 146.16 per dollar

Cryptocurrencies

• Bitcoin fell 2% to $58,652.73
• Ether fell 1.8% to $2,619.53

Bonds

• The yield on 10-year Treasuries declined two basis points to 3.86%
• Germany’s 10-year yield declined three basis points to 2.22%
• Britain’s 10-year yield declined three basis points to 3.90%

Commodities

• West Texas Intermediate crude fell 0.8% to $76.05 a barrel
• Spot gold fell 0.2% to $2,502.28 an ounce

This story was produced with the assistance of Bloomberg Automation.