S&P 500 eyes 2,000 before Yellen at Jackson Hole

US markets are understandably looking tentative and largely unchanged on today’s market open; yesterday had some strong housing and sentiment data which helped the S&P 500 make new highs and the Dow cross back above 17,000. At these critical levels the focus will be on Janet Yellen’s speech at Jackson Hole and whether she chooses to reinforce the slightly more hawkish FOMC minutes from Wednesday.

Futures suggest the Dow Jones will open 5 points higher at 17,044 with the S&P500 expected to open unchanged at 1,992 and the Nasdaq 2 points higher at 4,049.

Wall Street economists have largely been left off the guest list at Jackson Hole this year indicating Janet Yellen could try to avoid making outright policy comments in today’s speech. Realistically, when the topic is labour market economics and the current reasoning for the Fed keeping interest rates low is slack in the labour market; anything Yellen says will be interpreted in the framework of Fed policy.

Markets are looking to take their direction over whether Yellen chooses to reinforce the more hawkish tone of the minutes or play them down by being more dovish. While the Fed minutes did allude to the possibility of hiking rates sooner if the economy continues to improve, it was really just a more aggressive way of saying “data dependant”. So Yellen can likely match the tone of the minutes and not disrupt markets at the same time.

Gap shares look like making a higher open today after beating its EPS estimates yesterday. Investor excitement over the results was tempered somewhat by Gap, like many retailers seeing a drop in margins because of a continuing period of discounting.

Also yesterday, GameStop reported upbeat results and its guidance for next quarter topped analyst estimates while Aéropostale beat on second quarter results but issued a more subdued third quarter outlook.

Foot Locker is expected to report earnings of 54c per share on revenue of $1.57bn before the open today.

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