Nasdaq, S&P, Dow Jones futures slip, yield curve steepens ahead of Powell

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Stock index futures are lower Friday following a rally in the previous session, but direction will be driven by what Fed chief Jay Powell says in Jackson Hole.

Nasdaq 100 futures (NDX:IND) -0.6%, S&P futures (SPX) -0.4% and Dow futures (INDU) -0.3% are lower.

Markets have positioned for a hawkish message from Powell and pushback on expectations for a Fed pause. Fed funds futures price in a 60% chance of a hike of 75 basis points next month. But Wells Fargo and Citi say that apart from today’s short-term noise, the speech may have little impact on equities.

Longer rates are higher. The 10-year Treasury yield (US10Y) is up 6 basis points to 3.08% and the 2-year yield (US2Y) is up 1 basis point to 3.38%.

Looking at technical levels, the bond market could see an unwinding of big bearish bets right after Powell speaks, even if he is hawkish, Akira Takei of Asset Management One says. The speech may be a catalyst for investors to reverse positions or take profits on shorts, he said, according to Bloomberg.

The market will get another batch of data ahead of Powell’s speech. Personal income and spending numbers for July arrive before the bell. Economists expect a 0.4% rise in spending, significantly down from the 1.1% June rise, with income steady at a 0.6% rise. The core PCE price index will also draw attention.

“Consumers are generally balancing very negative real wages with steady consumption, though that is easier for higher income households to accomplish,” UBS chief economist Paul Donovan said. “The inflation measures should moderate.”

Among active stocks, Affirm Holdings is slumping following disappointing guidance.

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