Powell speaks — What you need to know in markets on Friday

Myles Udland
Markets Reporter

Stocks dropped Thursday during what was a lackluster trading session ahead of a key speech on Friday from Federal Reserve Chair Jerome Powell.

Each of the major indexes, however, dropped just modestly as the week of continued legal woes for President Donald Trump has continued to not play a big part in the market’s daily action.

And while the political headlines have been noisy this week and investors are facing a key central bank speech on Friday, markets are ultimately heading into some of the slowest trading of the year and it shows.

At 10:00 a.m. ET on Friday, Powell will speak at the annual Jackson Hole Economic Symposium with a speech set to take on the topic of monetary policy in a changing economy.

In a note ahead of the report, Brett Ryan at Deutsche Bank said, “At Jackson Hole, we do not expect Fed Chair Powell’s speech to move market expectations in either a more hawkish or dovish direction. In our view, Powell’s discussion will likely focus on longer-term issues for monetary policy, much as Wednesday’s FOMC minutes did.”

Fed chair Jerome Powell will speak Friday from Jackson Hole, WY, delivering to markets one of his most important speeches of the year. (GETTY IMAGES NORTH AMERICA/AFP| ALEX WONG)

Ryan said that Powell is likely to re-hash four themes he addressed in a speech back in June, which were uncertainty around the estimates of the natural rate of unemployment, inflation’s relationship with unemployment, financial stability in a strong economy, and costs and benefits of sustained strong economic runs.

“In short, we expect Powell’s speech to reiterate the point that the Fed remains on course to move policy toward a neutral setting, relying on the data to provide clues as to exactly where neutral may be,” Ryan said.

What Powell has to say about these key issues he’s honed in on since becoming Fed chair will provide clues as to what the Fed might do when it finally get to what they estimate to be a neutral setting.

Elsewhere on the economic calendar on Friday, investors will get the July report on durable goods orders and on the earnings side, Foot Locker (FL) will be the only S&P 500 member to report earnings while Hibbett Sports (HIBB) and The Buckle (BKE) will also report results from the retail sector.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland