Opening Bell: Futures, Stocks Edge Lower; Yields Waver; USD Dips Ahead Of Fed

US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000, along with European stocks slipped lower on Thursday, ahead of a much anticipated speech later today by Fed Chair Jerome Powell.

Treasuries ticked up, the dollar fell and oil traded higher.

All eyes are on today's speech from the first virtual Jackson Hole Symposium, as markets await remarks that could push stocks even higher, or potentially put a halt to this unfathomable rally.

The Fed may end its decades-long policy to limit inflation to 2%, instead allowing it to rise higher for longer. This course shift is being considered because the COVID-19-battered US economy has failed to reach what is considered the right rate of inflation to produce growth, displaying out-of-control inflation spikes instead.

If this change occurs, it would reduce the value of the dollar and provide an additonal boost to equities.

This morning, contracts on US benchmarks retreated after the S&P 500 and NASDAQ yesterday carved out additional record highs, buoyed by the ongoing rally in tech stocks.  The Dow reached its highest point since Feb. 21, before the pandemic pushed stocks over the edge.

The Stoxx Europe 600 Index declined at the open, dragged lower by Rolls-Royce Holdings (LON:RR) after the multinational engineering company, released plans to liquidate assets in order to raise funds after coronavirus lockdowns decimated air travel.

Earlier this morning, Asian stocks were mixed. China’s Shanghai Composite was one of the few regional gainers, (+0.6%). As we've noted previously, this benchmark tends to do well when others are sold off. South Korea’s KOSPI lagged, down more than a full percentage point.

During yesterday's New York session, stocks extended a string of records as investors priced in expected, looser monetary conditions, as the US economy signaled it's recovering when Durable Goods Orders significantly bested forecasts.

The Russell 2000 was the only major US index in the red, but our analysis suggests it may be getting ready to surge.

The small cap index is forming a bullish flag within a bullish channel.

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The yield on 10-year Treasuries, the world’s benchmark bond, hovered at about 0.69% after rising each day so far this week.

The dollar also entered a holding pattern against its closest peers, just above a two-year low ahead of Powell’s comments which may center on interest rate parameters.

Technically, yields fell after yesterday’s Gravestone doji that confirmed the resistance of the Aug. 13 high and its subsequent hanging man.

The dollar appears to have regained its composure after a two-day selloff, though it's marginally lower at time of writing.

However, the global reserve currency may have already completed a rising flag, bearish after completing the preceding pennant, within a steepening falling channel.

Gold gave up an advance, after touching the downtrend line since the Aug. 7 high.

The precious metal is being squeezed between the rising channel, supported by an Inverted Hammer, followed by confirming higher prices, itself a Hammer, while the downward pressure follows the bearish flag that preceded.

Oil has slipped lower, as markets anxiously await the fallout from Hurrican Laura which is bearing down on Texas and Louisiana.

WTI is trading within a holding pattern since yesterday's high-wave candle that notched the highest price for the commodity since March 5. Possible hurricane damage notwithstanding, there are other, perhaps more significant factors pressuring the price of oil going forward.

h2 Up Ahead/h2

• US Pending Home Sales figures are released today; they're forecast to have slipped to 3.0% in July from 16.6% in June.
• Canadian GDP for June will be reported on Friday. MoM it's expected to have grown by 5.6% from May's 4.5%

h2 Market Moves/h2 h3 Stocks/h3

• The Stoxx Europe 600 Index decreased 0.1%.
• Futures on the S&P 500 Index dipped 0.2%.
• NASDAQ futures declined 0.2%.
• The MSCI All-Country World Equity Index was little changed.

h3 Currencies/h3

• The Dollar Index climbed almost 0.1% to 92.90.
• Sterling gained 0.1% to 0.8947 per euro.
• The Japanese yen was little changed at 105.98 per dollar.
• The Indian rupee strengthened 0.5% to 73.936 per dollar.

h3 Bonds/h3

• The yield on 10-year Treasuries decreased less than one basis point to 0.68%.
• The yield on two-year Treasuries fell less than one basis point to 0.15%.
• Britain’s 10-year yield sank two basis points to 0.282%.
• Germany’s 10-year yield sank three basis points to -0.44%.

h3 Commodities/h3

• West Texas Intermediate crude fell 0.1% to $43.33 a barrel.
• Gold weakened 0.6% to $1,941.81 an ounce.
• Silver dropped 0.8% to $27.27 per ounce.
• Iron ore sank 2.2% to $117.50 per metric ton.