This week, all eyes are on the Jackson Hole Economic Symposium, hosted by the Federal Reserve from Thursday, Aug. 22, to Saturday, Aug. 24.
The event is set to be a key moment for financial markets, with investors eagerly awaiting signals from Fed Chair Jerome Powell‘s speech scheduled for Friday at 10 a.m. E.T.
Powell’s remarks are expected to offer crucial insights into the Federal Reserve’s next moves, particularly the anticipated rate cut in September.
Anticipation Builds For September Rate Cut
Market consensus points to the Federal Open Market Committee (FOMC) delivering its first rate cut since March 2020 at the upcoming Sept. 18 meeting.
This expectation was hinted at by Powell during the July FOMC meeting and is currently fully priced in by market participants.
However, the size of the rate cut remains an open question. Recent stronger-than-expected economic data has shifted the odds toward a smaller 25-basis-point cut rather than a more significant 50-basis-point move.
According to Fed futures, as tracked by the CME Group's FedWatch tool, there is a 77.5% probability of a 25-basis-point cut, compared to a 22.5% chance of a larger 50-basis-point reduction. Beyond September, markets are also leaning towards another 25-basis-point cut in November and a more substantial 50-basis-point cut in December.
Market Reactions To Jackson Hole Events
Historically, the Jackson Hole Symposium has been a critical event for market participants, influencing the performance of the S&P 500 index.
A Benzinga analysis of the past 10 Jackson Hole events reveals that the S&P 500's performance during the symposium days (Thursday and Friday) has been relatively flat, with an average decline of 0.4%, and a median return of 0%.
When considering the entire week, the major stock market index, as tracked by the SPDR S&P 500 ETF Trust SPY, shows a modest average gain of 0.4%, with the median performance slightly better at 0.8%.
Out of the past 10 events, the S&P 500 recorded positive returns in six instances over the two-day window and in seven instances, over the entire week.
| S&P 500 Return During Symposium Days (Thu.-Fri.) | S&P 500 Return During Entire Week | |
| Aug. 24-26, 2023 | -1.4% | 0.8% |
| Aug. 25-27, 2022 | -3.4% | -4.0% |
| Aug. 26-28, 2021 | 0.4% | 1.6% |
| Aug. 27-28, 2020 | 0.6% | 3.3% |
| Aug. 22-24, 2019 | -2.9% | -1.4% |
| Aug. 23-25, 2018 | 0.7% | 0.9% |
| Aug. 24-26, 2017 | 0.0% | 0.8% |
| Aug. 25-27, 2016 | -0.3% | -0.6% |
| Aug. 27-29, 2015 | 2.4% | 0.8% |
| Aug. 21-23, 2014 | 0.0% | 1.8% |
| Average | -0.4% | 0.4% |
| Median | 0.00% | 0.8% |
| Max | 2.4% | 3.3% |
| Min | -3.4% | -4.0% |
Notable Jackson Hole Market Reactions
2022: Hawkish Powell Remarks Trigger Selloff
During the 2022 Jackson Hole Symposium, the S&P 500 plunged 3.4% between Thursday and Friday after Powell emphasized the Fed's commitment to combating inflation through continued rate hikes, even at the risk of economic pain.
Markets interpreted his comments as more hawkish than expected, leading to a 4% decline in the S&P 500 over the entire week as investors grew concerned about the impact of prolonged higher interest rates on economic growth and corporate earnings.
2019: Trade War Uncertainty And Lack of Guidance
In 2019, Powell’s speech focused on navigating the U.S. economy amid global trade tensions, particularly the U.S.-China trade war. However, his remarks lacked clear forward guidance on future Fed actions, which led to market uncertainty.
The S&P 500 dropped 2.9% during the symposium days and declined 1.4% over the week, reflecting concerns over the unclear direction of monetary policy amid rising global risks.
2015: Cautiousness On Rate Hikes
In August 2015, with the Fed debating the timing of its first interest rate hike since the financial crisis in 2008, discussions at the symposium centered on global economic conditions and their implications for U.S. monetary policy. Fed Vice Chairman Stanley Fischer hinted that the Fed might be closer to raising rates, depending on economic data.
The S&P 500 reacted positively, gaining 2.43% during the symposium days and 0.8% over the week, as markets were encouraged by the Fed's cautious approach to rate hikes.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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