Thursday's Market Minute: To Taper Or Not To Taper; That Is The Question!

For the rest of the week, the focus for investors and traders will be squarely on the Fed at the Jackson Hole Symposium as we await comments from chair Jerome Powell on Friday. Market participants are looking for further insight as to the Fed’s position on when they expect to begin tapering the $120B in monthly asset purchases currently in place. Traders are looking for answers to two simple questions; how much, and how fast?

Unfortunately, I’m not sure we’re going to get the clarity we’re seeking. The Fed has been clear that while we’re closer to their goals, we’re still not there. Next week, we’ll get more information on the labor front with the monthly jobs report on Friday, so I’d be surprised to see them announce anything ahead of such a closely watched report.

We also still have a fair amount of coronavirus delta variant unknowns. Even though not many expect to see the strict lockdown measures we saw at the beginning of the pandemic, we continue to see mask mandates and case counts spike which ultimately could weigh on economic conditions.

Last, the Fed has acknowledged that inflation remains somewhat elevated, but commodities are well off the spring highs and the Fed has been clear, much of the inflation pressures we’re seeing will be short-lived. Indices remain at or near all-time highs and in a well-defined upward trend environment, with no indication investors are concerned the Fed will rock the boat, and I can’t imagine they will during a thinly traded August market.

In addition to the Fed at the end of the week, we have more economic data to watch including Jobless Claims and GDP at 8:30am ET today, while Personal Income & Spending could move markets tomorrow. We also have a few companies reporting quarterly results like Abercrombie & Fitch ANF, Dollar Tree DLTR, Dollar General DG, and J.M. Smucker SJM before the bell today. Watch out for Dell DELL, Peloton PTON, VMWare VMW, Workday WDAY, Big Lots BIG, and Hibbett HIBB after today’s close and tomorrow morning.