Jackson Hole, U.S. Recession, DNC

Investing.com — As Wall Street begins the new week, major indices are expected to consolidate following significant gains from the previous week. Investors are awaiting the release of the minutes from the last Federal Reserve meeting and the much-anticipated Jackson Hole symposium. Additionally, a four-day Democratic National Convention will kick off this week.

### 1. Jackson Hole Meeting in Focus
The highlight of the week will be the Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming, commencing on Friday. Investors are eager for insights regarding the timing and pace of potential interest rate cuts in the months ahead.

After experiencing its best week of the year, the market is optimistic about a gradual recovery for the U.S. economy, buoyed by recent positive economic data that has alleviated fears of a recession. Most market observers expect the Federal Reserve to reduce rates at its meeting in September, with the main discussion centered on whether the cut will be 25 or 50 basis points.

Fed Chair Jerome Powell’s speech is set to be the focal point of the event, and the market sentiment seems to lean towards a dovish perspective, especially after remarks over the weekend from Fed members indicating the possibility of easing measures in September.

The Fed has kept its benchmark overnight interest rate in the 5.25%-5.50% range since July of the previous year, following a cumulative increase of 525 basis points since 2022.

### 2. Futures Consolidate After Strong Week
On Monday, U.S. stock futures showed slight declines as they consolidated after last week’s impressive gains, reflecting growing confidence in the resilience of the economy.

As of early Monday, the futures for major indices were down slightly, with the broad-based index rising 3.9% last week, marking its best performance since the beginning of 2023. The tech-heavy index soared 5.2%, while the blue-chip index gained 2.9%.

Investors are keenly awaiting the release of the latest meeting minutes from the Federal Reserve on Wednesday, followed by Jerome Powell’s address at Jackson Hole.

Earnings reports will continue this week, with Palo Alto Networks and Estee Lauder set to release results on Monday.

### 3. Democratic National Convention Set to Start
The Democratic National Convention begins this week, with Vice President Kamala Harris poised to formally accept the party’s presidential nomination on Thursday night through a highly anticipated speech.

President Joe Biden has decided to withdraw his reelection campaign following a less-than-favorable debate performance against Republican candidate Donald Trump in late June, which prompted calls for him to step aside from within his party.

Entering the convention, Harris has experienced a notable shift in momentum, with polling data indicating her stronger position in several battleground states. Recent polls suggest that she is now better positioned in a head-to-head matchup against Trump, having gained over six points in national polls.

Analysts suggest that the limited duration of the campaign may benefit Harris by minimizing opportunities for Republican attacks on her policy positions, though she still needs to connect with undecided voters. This week’s convention offers her a chance to further introduce herself and share her policies, as will next month’s debate with Trump.

### 4. Goldman Cuts Likelihood of U.S. Recession
Goldman Sachs has reduced the likelihood of the U.S. entering a recession within the next year from 25% to 20%, following the release of positive economic indicators.

Earlier this month, the firm raised its recession probabilities due to a spike in the unemployment rate to a three-year high in July, which raised concerns of an economic downturn. However, Goldman Sachs’ chief U.S. economist noted that recent data has shown no signs of a recession, leading to their lowered forecast.

The latest jobless claims report indicated a decline in unemployment benefit applications, while retail sales recorded their most significant increase in a year and a half in July. Should the upcoming August jobs report appear favorable, Goldman may further decrease its recession probability to 15%.

The firm anticipates a 25 basis point rate cut at the Fed’s September meeting but has not dismissed the possibility of a more substantial reduction, depending on the jobs report outcome.

### 5. Crude Slips as Gaza Ceasefire Talks Continue
Crude oil prices decreased on Monday amid concerns over weakening demand in China, the world’s largest oil importer, while ceasefire discussions in the Middle East are a key focus.

As markets opened, crude futures saw a slight drop, reflecting recent trends where benchmarks fell nearly 2% late last week following disappointing economic signals from China, including a decline in new home prices and rising unemployment.

Attention now shifts to ceasefire negotiations in Gaza, which are underway in Cairo post a recent meeting in Doha. U.S. Secretary of State Antony Blinken emphasized the significance of the latest diplomatic efforts to secure a ceasefire deal, marking it as a crucial opportunity amid escalating regional tensions that could affect oil supply from this area.