5 Things To Know Before The Stock Market Opens August 23, 2019
1. Dow futures lower on China's current tariff plans
Traders are working on the floor of the New York Stock Exchange.
Eduardo Munoz | Reuters
U.S. stock futures will be lower Friday morning, giving up gains after China unveiled a plan to impose retaliatory prices on a further $ 75 billion in US goods. St. Louis Federal Reserve President James Bullard's call Friday on several US interest rates had helped the future in the past. Thirty minutes after Wall Street opened at 9:30, Fed Chairman Jerome Powell delivers the central bank's annual economic symposium in Jackson Hole, Wyoming. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq were breaking their three-week loss of stripes. Dow closed modestly higher Thursday, while the S&P 500 and Nasdaq ended lower. With six trading days remaining in August, the three equity measures were still in negative territory for the month. Prior to Friday's full 201[ads1]9 session, however, the Dow was 12.5%; S&P was up 16.6%; and Nasdaq increased by 20.4%.
2. Fed Chief Powell Faces Tough Challenge
US Federal Reserve Chairman Jerome Powell speaks during a press conference following a Federal Open Market Committee meeting in Washington, DC July 31, 2019.
Andrew Caballero-Reynolds | AFP | Getty Images
Powell's speech could make or break the markets on Friday. He faces the tough challenge of presenting a unified monetary policy vote from the most shared central bank this year. He can create volatility in trading if he does not indicate plans to reduce interest rates again. As of Friday morning, the market set more than 90% odds of a quarterly cut in interest rates next month, following a corresponding reduction in July. Under pressure from President Donald Trump to keep up with impending measures across the globe, the Fed's job is not getting any easier. Indonesia's central bank reduced overnight rates in a surprising move.
3. Regional Fed Presidents Offer Interest Rates View
Bullard at St. Louis Fed told CNBC Friday that central bankers should cut interest rates because the reverse yield curve is "not a good place to be." Bullard, an election committee that voted for the committee this year, argued that the Fed should "take out the policy" with an interest rate cut, adding that it could always withdraw it. On Thursday, Philadelphia Fed President Patrick Harker, a non-voter in 2019, told CNBC that he sees no reason for further interest rate cuts. Kansas City Fed President Esther George told CNBC that the Fed does not need to cut prices because the economy is still strong. She was one of two Fed presidents in the region who voted against the cut in July. George also said the Fed's "big balance sheet" was pushing long-term bond yields, possibly contributing to the newer inversions.
4. Bond yields were stable after a third inversion
Treasury yields moved higher Friday morning, a day after the 10-year yield was reversed for the third time in just over a week, and traded short during the 2-year. The spread of flip-flops has occurred before every recession in the last half century. But on average, it has taken almost two years for the decline to materialize. In addition to US price guidance, traders will look for Powell's views on inversions and negative prices across Europe and Japan.
5. Larry Kudlow Adds More Tax Confusion
Larry Kudlow, director of the US National Economic Council, speaks during a Bloomberg Television interview outside the White House in Washington, DC, USA, Friday 2. August 2019.
Andrew Harrer | Bloomberg | Getty Images
Top Trump's economic adviser Larry Kudlow now reveals that the president could present a tax cut before the 2020 election. Kudlow's remarks in an interview on Thursday added another twist, in a week of mixed White House announcements tax cuts and other proposals to stimulate the economy. Before the China Customs News on Friday morning, Kudlow said Thursday that he still expected Chinese dealers to meet with Washington administration officials in September to continue talks aimed at resolving the two nations' trade and technology conflicts.
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