Stocks set for weekly gain as traders await Fed Chair Powell

BLOOMBERG

US futures and European stocks clocked mild gains on Friday as investors awaited Federal Reserve Chair Jerome Powell’s speech from Jackson Hole. Contracts on the S&P 500 gained 0.3%, signalling respite for underlying equities after August 24’s decline. Europe’s Stoxx 600 extended its first weekly advance in four. Commodity shares led gains as oil and iron ore prices climbed.
Equities have struggled for direction this week, gaining strongly one day only to wipe out the advance the next, as the focus swung from Nvidia Corp earnings to the trajectory of interest rates. Futures on the Nasdaq 100 were steady on Friday after the tech-heavy gauge sank more than 2%.
Treasury yields ticked higher, with those on two-year notes, which are more sensitive to imminent policy moves, holding above 5%. “There could be another phase of uncertainty and a broad-based selloff is possible depending on the magnitude of the hawkishness” at Jackson Hole, said Carlos von Hardenberg, portfolio manager at Mobius Capital Partners.
“But the market is differentiating relatively radically between companies that are in the pole position to show very strong earnings growth in the near and medium term.” Powell, who was scheduled to deliver a speech in Washington, was expected to outline how officials will assess whether rates should go higher and determine when it’s time to start cutting them.
The effects of higher-for-longer interest rates will overshadow the buzz around artificial intelligence, spelling trouble for tech stocks, according to Bank of America Corp strategists.  Elsewhere, China eased its mortgage policies further in a push to support its economy, although the boost to stocks on the mainland from the news proved short lived.
In commodities, iron ore was set for its biggest weekly gain since June ahead of China’s traditional peak season for construction activity from next month. Oil trimmed a weekly loss.