Jerome Powell’s Jackson Hole Speech Could Make or Break the Stock Market Rally

Federal Reserve Chair Jerome Powell's upcoming speech at the Jackson Hole Symposium is poised to test the stock market's recent rally. Investors are scrutinizing his remarks for clues on potential rate cuts in September, with market sentiment hanging in the balance.

Deutsche Bank analysts caution that Powell's comments may inject uncertainty into rate-cut expectations. A hawkish tone could destabilize rate-sensitive sectors like homebuilders and small caps, which have surged on anticipation of monetary easing.

The Fed's current pause follows three 2023 rate cuts, as policymakers assess the economic impact of trade and immigration policies. Recent jobs data revisions and inflation figures have fueled bets on renewed cuts, with fed funds futures pricing in high probability of September action.