US stocks tend to gain around Fed's Jackson Hole summer conference, analysis shows
U.S. stocks typically perform well around the Federal Reserve's Jackson Hole conference, with the S&P 500 averaging a 0.9% gain in the five days before and after the Fed chair's speech since 2010. This year, the index has declined ahead of the event, contrary to the usual trend. Investors are keen to hear if Chair Powell will signal a potential interest rate cut at the upcoming meeting, with an 84% chance priced in by Fed Fund futures. Notably, the S&P 500 fell in 2022 amid warnings of slower growth and high inflation.
By Lewis Krauskopf
NEW YORK, Aug 19 (Reuters) - U.S. stocks have tended to fare well around the Federal Reserve’s Jackson Hole gathering in August, according to a historical analysis from DataTrek Research, although the market has seen sizable moves in both directions in recent years.
The Fed’s annual Wyoming research conference is set for Thursday through Saturday, and Chair Jerome Powell’s speech on Friday is expected to be the main event for markets.
DataTrek looked at the benchmark S&P 500 (.SPX) in the five trading days before and after the Fed chair’s speech since 2010. The index gained an average of 0.9% over the period, with the bulk after the speech.
“This suggests that markets get incremental clarity from the chair’s speech, which in turn boosts equity valuations,” Nicholas Colas, DataTrek’s co-founder, said in a research note.
This year, the S&P 500 has slipped in the lead-up to the speech so far, Colas said in the note published early Tuesday. “This goes against the usual pattern, so we would not be surprised to see the index rally modestly through Thursday,” he said.
One notable exception to the trend was in 2022, when the index slumped 7.4% in the 10-day period. That year at Jackson Hole, Powell warned of slower growth as the Fed fought high inflation. The S&P 500 fell over 19% for the full year 2022 as the Fed raised interest rates.
In 2023, the index gained 3.3% in the studied period.
DataTrek noted the S&P 500 fell in 2013 and 2015 when Fed chairs Ben Bernanke and Janet Yellen did not attend the symposium.
This year, investors are eager to see if Powell reinforces expectations of a central bank interest rate cut at its September 16-17 meeting. Recent weak labor market data bolstered those expectations.
Fed Fund futures on Tuesday were pricing in an 84% chance of such a move, according to LSEG data.
GRAPHIC: US stock market performance around Jackson Hole
