Wall Street Reacts Ahead of Key Federal Reserve Speech

Wall Street's main indexes anticipate an uptick as Federal Reserve Chair Jerome Powell prepares to give a crucial speech at the Jackson Hole Economic Symposium. Traders are optimistic about potential rate cuts in the coming months, which could signal the Fed's response to a gradually slowing U.S. economy.

Wall Street's main indexes were poised to open higher on Friday as investors awaited a crucial speech from Federal Reserve Chair Jerome Powell. The speech is expected to provide clues on the pace of potential rate cuts in the world's largest economy.

Minutes from the Fed's July meeting revealed some policymakers' willingness to consider rate cuts in September. Powell's address at the Jackson Hole Economic Symposium, scheduled for 10 a.m. ET (1400 GMT), is anticipated to offer guidance on the central bank's future actions amid a gradually slowing U.S. economy.

Traders have priced in a 71.5% likelihood of a 25-basis-point cut at the Fed's September meeting, according to CME Group's FedWatch tool. Sam Stovall, chief investment strategist at CFRA Research, noted that while investors have been disappointed in the past, they hope for more clarity on the extent of the cuts this time. Recent economic data, including jobless claims and payroll revisions, suggest a gradual slowdown, easing fears of a severe downturn.

Wall Street's recovery from a recent plunge, triggered by weak employment data and yen carry trade issues, continues. Key indexes have significantly rebounded, with the S&P 500 nearing a record high. Pre-market trading saw gains in chip stocks, such as Nvidia, Broadcom, and Qualcomm, and rate-sensitive growth stocks like Apple and Tesla also showed positive movement.

Notably, Workday shares surged 15% following better-than-expected second-quarter revenue and a $1 billion stock buyback announcement. GM-backed Cruise announced a partnership with Uber for autonomous vehicle operations, boosting GM shares. Retailer Ross Stores also saw gains after raising its fiscal 2024 profit forecast. Later in the day, new home sales data is expected to show stability following a recent low.

(With inputs from agencies.)