Powell speech set to move the markets

Briefing.com Summary:

*Markets await Fed Chair Powell’s Jackson Hole speech for clues on September rate cut possibility.

*Some buy-the-dip interest is evident ahead of the open after five straight losses for the S&P 500.

*NVIDIA continues to backslide amid report it has asked some suppliers to stop H20 chip production.

You might have heard this week that a certain someone is scheduled to deliver a keynote address at 10:00 a.m. ET today at the Jackson Hole Symposium. That certain someone is Fed Chair Powell, but the cloud hanging over the market this week is the uncertainty of what he might say.

The market at least knows this: his speech is titled “Economic Outlook and Framework Review.”

What the market is hoping for is an indication in that speech that suggests Fed Chair Powell is leaning toward a rate cut at the September 16-17 FOMC meeting. What the market has been anxious about is that he might not dangle that carrot given the recent run of inflation reports that have shown inflation moving away from the Fed’s two percent target, some recent comments from other Fed officials signaling their reluctance to cut rates, and the minutes for the July FOMC meeting, which revealed a majority of participants saw the upside risk to inflation outweighing the downside risk to employment.

The anxiousness has been filtering through the fed funds futures market. A little over a week ago, the probability of a 25 basis-point cut at the September FOMC meeting stood at 92.1%. Today it stands at 71.3%.

From our vantage point, Fed Chair Powell cannot escape mentioning the softer trend in payrolls growth when discussing the economic outlook, nor can he get past the fine point that core CPI and core PPI have moved away from the Fed’s inflation target.

He can escape, however, with a noncommittal view that is tied to the Fed’s knowingness that there will be another PCE inflation report, another employment report, another CPI report, and another PPI report before the next FOMC meeting. If he wants to signal a more dovish-minded leaning for the market, he will do so by emphasizing the soft payrolls data as a point of concern more so than the inflation readings.

Market participants will be parsing every word, and rest assured their interpretation of Fed Chair Powell’s remarks will be evident in the tape, in the behavior of the Treasury market, particularly the 2-yr note yield, in the move in the dollar, and in the action in the fed funds futures market.

What we can see in the tape now is a buy-the-dip bid. The S&P 500 has ended lower in each of the last five sessions, while the Nasdaq Composite has ended lower in five of the last six sessions. That weakness has been driven by losses in the mega-cap space and some general attrition in broad market pricing.

NVIDIA (NVDA) is trading 1.5% lower. The Information reported that NVIDIA has told some suppliers to stop production of its H20 chip for China. The rest of the Magnificent 7, though, are higher ahead of the open. Alphabet (GOOG) is a standout in that regard, up 1.5% on The Information’s report that Meta Platforms (META) has agreed to a $10 billion cloud deal with Google. 

Currently, the S&P 500 futures are up 14 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 32 points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up 136 points and are trading 0.3% above fair value. The 2-yr note yield is unchanged at 3.79%, and the 10-yr note yield is down two basis points to 4.31%.

The strength in the mega-cap space has overshadowed the weakness in Workday (WDAY) and Intuit (INTU), both of which are down more than 5.0%, following their earnings reports. Any strength seen before Fed Chair Powell’s speech, though, is subject to change if he somehow shoots down the market’s rate cut hopes.

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Originally Posted August 22, 2025 – Powell speech set to move the markets