Exploring the Impact of Fed Chair Powell’s Speech on Stock Trading Ahead of Earnings Season

Yahoo Finance Live’s Rachelle Akuffo joins the live show to discuss how stocks are traded ahead of Fed Chair Powell’s speech Tuesday.

video transcript

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RACHELLE AKUFFO: Here’s a look at what I’m watching this morning. Stocks suffer from the Monday blues as attention turns to a speech by Jay Powell, who takes stock of mid-way through earnings season and asks: Are we in an earnings recession? Well, from Amazon to Google, it seems like big tech wants a bigger and bigger slice of the health pie. We speak to an expert about how science fiction quickly becomes science fact.

And how much money do we spend? And where does the money go? From travel to crypto, we speak to Visa’s CFO this hour about the trends you need to know about. But first, let’s take a look at how the major indices are performing an hour and a half into the trading day. Of course, awaiting the news from Jay Powell, a bit of jitters in the markets here, but still outside of session lows, the Dow down about 1/3 percent there, 115 points there.

Take a look at the local S&P 500, which is down more than half a percent on the day, and the tech-heavy NASDAQ, which is also digesting the earnings season. Of course they lost 83 points that day. Let’s also look at the Treasury market as all the notes we get from the Fed are always reflected there. We see all three in positive territory there. Look, they’re up almost 3 1/3 percent in the five years, 2 1/3 percent in the 10 years, and just under 1 percent in the third year.

Well, of course, as this new trading week begins, there are many things for investors to keep an eye on. Here are some of the most important things to keep an eye on. Fed Chairman Jay Powell is of course preparing to speak at the Economic Club of Washington. That’s happening tomorrow. Well, this comes days after the January Congestion Report, just as the jobs picture was starting to show some signs of moderation. And investors, of course, will be eager to hear Powell’s remarks as investor optimism wanes over a potential pause in rate hikes that’s still possible.

And of course, while President Biden remains in DC, he’s preparing to deliver his State of the Union address and offer a glimpse of how he plans to advance his legislative priorities amid a new Congress. And the speech also comes as Washington works to get a grip on the debt ceiling, with US-China relations also likely to be major issues. This follows the aftermath of the launch of an alleged Chinese spy balloon.

And of course, on the earnings front, Disney is gearing up to report earnings results this week. All eyes will be on Bob Iger as this will be the first report since his return as Disney CEO. Now, shares of the media giant are up around 25% so far this year. We’ll see if the company will be able to sustain this momentum, or if this week’s results will see the shares fall, as sharing and streaming performance would naturally take the spotlight again.

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