U.S. stock futures edge higher ahead of Powell’s Jackson Hole speech
Investing.com - U.S. stock futures slipped slightly lower Friday amid caution ahead of Fed chair Jerome Powell’s speech at the Jackson Hole symposium later in the session. Meta signs a huge deal with Google, which the production of key Nvidia chips are in doubt.
1. Powell to speak
U.S. Federal Reserve Chair Jerome Powell is scheduled to speak later in the session at the central bank’s Jackson Hole symposium - the week’s highlight as investors look for clues over the path of interest rates for the rest of the year.
Expectations of an interest rate cut in September soared at the start of the month in the wake of a surprisingly soft payrolls, but these bets have dropped significantly over the past week, ensuring volatility as he speaks.
Last week, traders were pricing in a 99 percent chance of a 25 bps rate cut at the next Fed meeting. That is now down to 71.5 percent, according to Investing.com’s Fed Rate Monitor Tool.
The drop was caused largely by hotter-than-expected producer inflation data, but hawkish comments from Fed members have also contributed.
Kansas City Fed President Jeffrey Schmid, a voting member, said the central bank isn’t rushing to cut interest rates, pointing to inflation still running above its 2% target and a resilient labor market.
Separately, Cleveland Fed President Beth Hammack, a non-voting member, voiced concern Thursday that stubborn inflation may rule out an interest-rate cut in September.
Powell’s speech comes amid market concerns of stagflation, a combination of sluggish growth and sticky inflation that could limit the Fed’s ability to ease monetary policy.
The Fed chair could also use the opportunity to speak about the importance of the central bank’s independence, given the extent of criticism from the Trump administration, and from the president in particular.
Earlier this week, Trump urged Fed Governor Lisa Cook to resign over mortgage allegations raised by one of his political allies, intensifying his effort to gain influence over the U.S. central bank.
2. U.S. futures fall ahead of Powell
U.S. stock futures slipped lower Friday, with investors awaiting Fed chair Jerome Powell’s speech at the Jackson Hole symposium for clues over the future path of monetary policy.
At 03:00 ET (07:00 GMT), the S&P 500 futures traded 7 points, or 0.1%, lower Nasdaq 100 futures dropped 60 points, or 0.3%, and Dow futures fell 20 points, or 0.1%.
The major indices closed lower Thursday, with the broad-based S&P 500 posting a fifth straight day of declines.
As of Thursday’s close, all three major averages were headed for a losing week. The S&P 500 is off 1.2% week to date, the NASDAQ Composite is down 2.4% and the Dow Jones Industrial Average is on pace for a 0.4% slide.
Investors are cautious ahead of Powell’s speech at the Fed’s annual economic symposium in Wyoming, hoping to gain clarity on the interest rate outlook.
On the corporate front, both Intuit (NASDAQ:INTU) and Zoom (NASDAQ:ZM) will be in the spotlight after the companies posted results after the close Thursday.
3. Nvidia stopping H20 chip production?
Nvidia (NASDAQ:NVDA) has asked some of its component suppliers to stop production related to its made-for-China H20 general processing units, according to reports, as Beijing makes life difficult for the American chip giant.
Reuters reported that Nvidia has asked Foxconn (SS:601138) to suspend work on the H20 AI chip, the most advanced product the U.S. company is currently permitted to sell to China.
At the same time, The Information detailed that Nvidia has asked Arizona-based Amkor Technology (NASDAQ:AMKR), which handles the advanced packaging of the company’s H20 chips, and South Korea’s Samsung Electronics (KS:005930), which supplies memory for them, to halt production.
Nvidia was summoned to a meeting with the Cyberspace Administration of China last month, and asked to provide information on the chips as Beijing has raised concerns that they could contain certain tracking technology, allowing them to be operated remotely.
Nvidia only resumed sales of the H20 in July after being forced to halt shipments in April due to U.S. restrictions.
"We constantly manage our supply chain to address market conditions," Nvidia said in a statement, declining to elaborate further.
4. Meta signs deal with Google
Meta Platforms (NASDAQ:META) has signed a $10 billion deal with Alphabet’s (NASDAQ:GOOGL) Google, the Information reported, which will see the Facebook owner use Google Cloud’s servers, storage, and other services over the next six years.
Meta, along with Wall Street’s so-called AI Hyperscalers, is racing to build superintelligent AI amid growing calls from investors for returns on the hundreds of billions of dollars poured into AI development.
The company raised the bottom end of its annual capital expenditures forecast by $2 billion, to a range of $66 billion to $72 billion last month.
Meta is seeking outside partners to help it fund the massive infrastructure needed to power AI by offloading $2 billion in data center assets, the company disclosed in a filing earlier this month.
5. Crude set for weekly gains
Oil prices edged higher Friday, on track to snap a two-week losing streak, amid increasing signs that peace negotiations between Russia and Ukraine were stalling.
At 03:00 ET, Brent futures gained 0.1% to $67.68 a barrel, and U.S. West Texas Intermediate crude futures rose 0.1% to $63.59 a barrel.
Both contracts climbed more than 1% in the prior session. Brent has risen 3% this week, while the WTI has gained around 1.4%.
The three-and-a-half-year war in Ukraine continued unabated on Thursday, and traders are pricing in more risk that the supply of Russian crude to the global market remains disrupted.
Oil prices were also supported by a larger-than-expected drawdown from U.S. crude stockpiles in the last week, indicating strong demand.
(Reuters contributed reporting.)