MARKET WRAPS
Watch For:
Personal Income for July; University of Michigan Final Consumer Survey for August
Opening Call:
Stocks were heading for modest losses on Friday as a major catalyst loomed, with Jerome Powell's speech at Jackson Hole likely to swing market sentiment one way or the other.
Investors will be closely monitoring Powell's remarks at 10 a.m. Eastern for indications of the Federal Reserve's monetary policy pathway, including whether the central bank is likely to continue aggressively tightening financial conditions or begin easing up in 2023.
"Our U.S. economists don't expect that Powell will deliver explicit guidance for the September meeting given that we've still got another jobs report and CPI print beforehand," said Henry Allen, an analyst at Deutsche Bank.
"However, they do think he'll likely to skew his remarks in a hawkish direction to ensure the Fed's inflation-fighting credentials are unquestioned."
Read Barrons.com: Stocks Have Been Less Volatile. Jackson Hole Could Change That
Stocks to Watch:
Marvell Technology was down almost 4% in premarket trading after it issued a lukewarm sales forecast for the third quarter.
Marvell expects fiscal third-quarter sales of $1.56 billion, plus or minus 3%. Analysts forecast sales of $1.58 billion. The company said it expects adjusted earnings in the period of 56 cents to 62 cents a share vs. analysts' estimates of 61 cents.
Read more here.
Other Movers:
Dell shares slipped 4.1% after it reported a profit drop and noted a decline in demand.
Gap said its customers pulled back during the recent quarter because of rising fuel costs and other inflationary pressures, though its sales beat Wall Street forecasts. Its shares jumped 6.4% premarket.
Ulta Beauty reported higher revenue in the recent quarter than analysts had forecast. Its shares added 3% off hours.
Workday shares climbed 11% after it reported higher subscription revenue and said it expects the momentum to continue in the current quarter.
Forex:
The dollar edged higher in Europe and is likely to extend gains as long as Jerome Powell points to further rate increases in his Jackson Hole speech, ING said.
Powell may leave the prospect of further rate rises dependent on data, so the dollar's rise may be limited until next Friday's jobs report. Still, ING expects the DXY Index may reach 110.00 in the coming days--from 108.607 currently.
Markets may find enough reason after Friday's speech to push expectations for a peak in interest rates closer to 4% and move away from the current pricing of one to two rate cuts in 2023, ING said.
ING also said sterling could extend its losses if Powell signals further rate rises.
"A firm reiteration that additional forceful tightening to curb price pressures could remain at the core of Powell's message today."
Sterling's sensitivity to risk means EUR/GBP could also rise if Powell's speech hits market sentiment, ING said.
Bonds:
The yields on Treasury bonds rose ahead of Powell, with the benchmark 10-year yield climbing to 3.072%, from 3.023% Thursday. Yields on shorter-dated bonds also edged up.
Market positioning suggests that investors expect . Powell to say that monetary conditions should tighten further to fight inflation, analysts said. This would echo recent comments by other Fed officials.
Wagers on a bigger interest-rate hike in September increased on Friday. Many funds that use borrowed money are betting that two-year Treasury bonds will lose value, building the biggest net short position in futures in over a year, data from the Chicago Board of Trade showed.
Energy:
Oil prices bounced back more than 1% in European trade after falling in the previous session, as the market weighs signs of weaker demand with expectations of an OPEC+ output cut.
Energy ministers from OPEC+ nations have chimed in with support for comments from Saudi Arabia that point to an output cut. Libya's oil minister said demand remains strong and reports about it weakening were "misleading" and sending the "wrong signals" to the oil market.
"We think [demand] fundamentals have clearly been far weaker in 2Q and 3Q than they were in 1Q, and that, not fake news, has been the key driver of prices," Standard Chartered said.
Metals:
Gold prices weakened, with Powell's remarks likely to be closely analyzed for hints about the path of interest rates.
The Fed's rate rises haven't been positive for gold, which--as a non-yielding asset--becomes less attractive when interest rates and bond yields rise. The ICE Dollar Index is also close to a 20-year high, weighing on dollar-denominated gold.
For those reasons, ABN Amro has downgraded its gold forecasts for the year-end to $1,700 from $2,000 an ounce.
"Central bank policy will continue to dominate the direction in gold prices" this year and next, ABN Amro said.
TODAY'S TOP HEADLINES
Tesla Supplier Panasonic Plans Additional $4 Billion EV Battery Plant in U.S.
TOKYO-Panasonic Holdings Corp., a supplier to electric-vehicle maker Tesla Inc., is in discussions to build an additional roughly $4 billion EV battery plant in the U.S., according to people familiar with the matter.
The Japanese company is looking at Oklahoma as the location for its new plant, though there are no guarantees that an agreement will be reached, the people said.
Twitter Ordered to Provide Subset of Elon Musk's 'Absurdly Broad' Request for Data
A Delaware judge called Elon Musk's request for years of data about Twitter Inc.'s spam and fake accounts "absurdly broad" but ordered the social-media company to provide a subset of the information in the continuing legal battle over the billionaire's soured $44 billion takeover.
Chancellor Kathaleen McCormick said in a decision Thursday that the request by Mr. Musk's legal team to compel the company to produce "trillions upon trillions of data points" for more than 200 million users was overly burdensome and "no one in their right mind has ever tried to undertake such an effort."
SpaceX, T-Mobile to Connect Satellites to Cellphones in Remote Areas
SpaceX and T-Mobile US Inc. said they plan to work together to use the rocket company's satellites to provide connections to T-Mobile cellphones across the U.S., even in remote areas with no current wireless service.
The companies said Thursday that the new service will use Starlink satellites that SpaceX plans to launch and provide connections to U.S. consumers using wireless spectrum controlled by T-Mobile. The companies said they plan to start with a test of text-messaging services in select markets before the end of 2023.
Ramsay Health Care Rebuffs Revised Proposal by KKR-Led Consortium
SYDNEY-Ramsay Health Care Ltd. rejected a revised takeover proposal from a KKR & Co. Inc.-led consortium, calling it meaningfully inferior to the consortium's now-withdrawn initial approach.
The ASX-listed Australian private-hospital operator on Friday said that it decided not to engage with the consortium on its revised proposal. Ramsay had continued to discuss an original cash proposal worth A$88.00 a share until the consortium withdrew it on Friday, it said.
German Consumer Sentiment Expected to Drop to New Record Low in September
Consumer confidence in Germany is set to fall in September to an all-time low, as propensity to save increases amid fears of higher energy costs.
Market research group GfK's forward-looking consumer-sentiment index forecasts confidence declining to minus 36.5 in September from a revised figure of minus 30.9 in August. September's figure is below a forecast from economists polled by The Wall Street Journal of minus 31.8.
SEC Requires Disclosures on Executive Pay Versus Company Performance
The Securities and Exchange Commission on Thursday voted to require companies to disclose how well top management's pay tracked with corporate performance over several years, the culmination of a long-delayed effort by the U.S. securities regulator.
The new rule puts into practice a provision required by the 2010 Dodd-Frank Act to discourage financial fraud and better align executive compensation with corporate results. The SEC initially proposed the rule in 2015 under a previous chair, Mary Jo White. In January, under Chair Gary Gensler, it sought additional public feedback on the proposal.
Biden Describes Trump's Governing Philosophy as 'Like Semi-Fascism'
ROCKVILLE, Md.-President Biden described the governing philosophy of former President Donald Trump and his allies as "like semi-fascism" during a fundraiser for the Democratic National Committee on Thursday.
"What we're seeing now, is either the beginning or the death knell of an extreme MAGA philosophy," Mr. Biden said at a fundraiser at a private home in Bethesda, Md., referring to the Republican former president's "Make America Great Again" slogan. "It's not just Trump, it's the entire philosophy that underpins the-I'm going to say something, it's like semi-fascism."
Georgia Prosecutor Seeks Testimony From Mark Meadows, Trump's Last Chief of Staff
Georgia's Fulton County District Attorney Fani Willis is seeking testimony from Mark Meadows, former President Donald Trump's final chief of staff, according to a court filing, as she investigates efforts by Mr. Trump and his allies to overturn the state's 2020 election results.
Ms. Willis, a Democrat, said in the filing Thursday that she is seeking to have Mr. Meadows appear before a special grand jury in Atlanta in September.
IRS Revenue Boost From Stronger Enforcement Is Scaled Back in CBO Estimate
Income limits on household tax audits and staffing challenges will reduce by $23 billion what the Internal Revenue Service is projected to collect from its expanded enforcement operations, according to the Congressional Budget Office.
(MORE TO FOLLOW) Dow Jones Newswires
08-26-22 0521ET
