U.S. Stocks Steady as Countdown to Jackson Hole Begins

U.S. stocks were broadly flat on Monday after posting their best week in a year, as investors began counting down the days until Fed Chairman Jerome Powell’s speech in Jackson Hole, which could reset rate cut expectations.

The S&P 500 (^GSPC) rose 0.1% to hover near record highs, while the Dow Jones Industrial Average (^DJI) also hovered around the flat line. The tech-heavy Nasdaq Composite (^IXIC) added 0.1%.

Stocks are expected to consolidate last week’s solid gains as calm returns to a market previously roiled by fears of a potential recession. Last week’s rally helped recoup losses from a selloff in early August as Wall Street fretted about cracks in the economy — concerns that have since been eased by encouraging data on inflation and consumer spending.

Attention is already focused on Powell’s speech at the central bank’s Jackson Hole symposium on Friday, in a quiet week for economic data. As confidence grows in a “soft landing” for the economy (Goldman Sachs now sees a lower likelihood of a recession), the question for investors is not whether the Fed will cut interest rates in September, but by how much.

Since Monday morning, traders take into account According to the CME FedWatch tool, the probability that the Fed will cut rates by 0.25% is 72% and that of a 0.50% cut is 28%. But the release of the minutes of the Fed’s July meeting on Wednesday could tip the balance.

At the same time, investors will also be keeping a close eye on the Democratic National Convention that begins Monday, which could provide more insight into what to expect from presidential candidate Kamala Harris.