August 22nd, 2025
Markets Edge Higher Ahead of Powell’s Jackson Hole Speech
After five consecutive sessions of losses, U.S. equities are ticking modestly higher to close out the week. Investor attention is firmly on Federal Reserve Chair Jerome Powell, who speaks at 10 a.m. ET at the central bank’s annual Jackson Hole symposium. While Powell may stop short of pre-committing to a September rate cut, acknowledgment of a softening labor market could set the stage for additional easing should inflation remain subdued.
Economic Takeaways:
- Treasury yields and the U.S. dollar are steady, while global equity markets trade with a mixed tone.
- Crude oil prices edged to their lowest point in more than two months below $63 per barrel for S. crude oil futures(/CL) before rebounding the last few days.
- Technically, the S&P 500 closed Thursday just under its 20-day moving average of 6,381, marking its first break below that level since August 1. The index has found steady support there over the past three months, with prior dips followed by swift rebounds. Briefing.com flagged the 6,290–6,315 range as the next key area to watch if selling pressure continues.
- Heading into Powell’s Jackson Hole speech, the CME FedWatch Tool assigns a 71.5% probability to a September rate cut, with a 28.5% chance of no change. Futures still reflect a strong likelihood of at least two rate cuts before year-end.
Jackson Hole in Focus: Policy Signals Expected
Jackson Hole has often been the stage for major Fed policy pivots, and today’s remarks could prove pivotal. At last year’s conference, Powell hinted at the start of an easing cycle, which ultimately led to a 1% reduction in policy rates. Since then, the Fed has largely stayed on hold due to sticky inflation and trade-related uncertainty. However, July’s weak jobs report has shifted market dynamics, with futures now pricing in roughly a 70% chance of a September rate cut—down from 90% a week earlier. We believe Powell may strike a balanced tone, acknowledging employment weakness while reiterating data dependence, especially with two key releases—the August CPI and jobs report—still to come. In our view, a precautionary “insurance” cut remains likely, barring an upside inflation surprise. Powell may also use today’s platform to announce the conclusion of the Fed’s balance sheet runoff, further signaling a dovish tilt.
Looking Ahead: AI and NVIDIA Take Spotlight
Beyond monetary policy, next week’s focus will shift toward technology and artificial intelligence. NVIDIA, now valued at $4.2 trillion and comprising 8% of the S&P 500, is set to release quarterly results Wednesday after the bell. With AI remaining the primary driver of equity market gains this year, the company’s outlook will carry outsized influence. Still, stretched valuations have begun to spark skepticism, with the Nasdaq retreating this week. A recent MIT survey showing that 95% of firms have yet to see measurable returns from generative AI investments has only added to the caution. Even so, we believe accelerating adoption and investment in AI infrastructure will sustain earnings momentum among mega-cap tech leaders, though investors are likely to place greater scrutiny on margins and profitability going forward.
On the Move
- Walmart (WMT) delivered a rare earnings miss yesterday.
- Nvidia (NVDA) slipped 1.2% in pre-market trading. The Information reported that Nvidia instructed some suppliers to halt production of components tied to its H20 AI chip—the lower-powered model recently cleared again for sale in China. Beijing has reportedly urged companies not to adopt the chip over security concerns. Bloomberg noted the production pause may signal weak demand in China, though CEO Jensen Huang said Friday that Nvidia is weighing a potential follow-up product for the market and emphasized the H20 contains no “security backdoors.”
- Tech stocks continued to retreat Thursday, with the sector now down in six of the past seven sessions amid profit-taking, tariff concerns, and expectations of rates staying higher for longer. Six of the Magnificent Seven closed lower.
- Ross Stores (ROST) gained 2.55% after reporting earnings per share above analysts’ estimates alongside in-line revenue. The retailer guided Q3 earnings below consensus but forecast stronger results for Q4.
- Lucid (LCID) declined more than 2% after announcing a reverse stock split.
- Intuit (INTU) fell 6.4% in early trading. While the company beat earnings expectations, guidance came in softer than expected, Barron’s
- Workday (WDAY) dropped 4.5% in pre-market trading despite topping earnings forecasts, as its Q3 outlook landed slightly below Wall Street consensus.
- BJ’s Wholesale Club (BJ) slipped 1.8% after missing on both earnings and revenue. The company maintained its sales outlook but raised full-year EPS guidance.
- Individual stock weakness extended into consumer-facing names, including Walmart (WMT), United Airlines (UAL), Costco (COST), Dollar General (DG), Delta Air Lines (DAL), Norwegian Cruise Line (NCLH), and Target (TGT). Walmart’s earnings miss, coupled with concerns that prolonged higher rates could squeeze consumer spending, weighed on both discretionary and staples sectors.
- Starbucks (SBUX) edged up 0.9% in pre-market trade after Reuters reported the company expects non-binding bids for a partial stake in its China business within two weeks. Starbucks reiterated it is not selling the entire operation.
What’s Ahead
August 25: July new home sales.
August 26: July Durable goods, August consumer confidence, and expected earnings from MongoDB (MDB) and Box (BOX).
August 27: Expected earnings from Nvidia (NVDA), Kohl’s (KSS), CrowdStrike (CRWD), Snowflake (SNOW), HP (HPQ), Five Below (FIVE), and Urban Outfitters (URBN).
August 28: Second quarter GDP second estimate and expected earnings from Dell (DELL), Marvell Technology (MRVL), Autodesk (ADSK), Ulta Beauty (ULTA), Gap (GAP), and Petco (WOOF).
August 29: July PCE prices, July core PCE prices, July personal spending, July personal income, University of Michigan final August Consumer Sentiment, and expected earnings from Alibaba (BABA).
Pump Radar
Stock Alerts