By Noreen Burke
Investing.com - Investors will be on the lookout for any hints this week from the Federal Reserve about how much it could do to help the recovery from the coronavirus pandemic. The economic calendar features updates on durable goods and home sales. Political developments will remain on the radar as the Republican convention kicks off on Monday, with Congress still locked in a stalemate about what measures should be included in the next round of fiscal stimulus. It could be another big week for stock markets after the S&P 500 recouped all its coronavirus-driven losses and ended at Friday at record highs. Meanwhile, energy traders will be closely following two tropical storms heading into the Gulf of Mexico. Here’s what you need to know to start your week.
- Fed Chair Jerome Powell takes center stage at (virtual) Jackson Hole
Investors will be looking for indications on how the Fed will try to manage the long-term economic recovery in a speech by Chairman Jay Powell on the opening day of the annual Jackson Hole conference on Thursday.
Since the global financial crisis, Fed chiefs have used their keynote speech at the Jackson Hole conference - being held virtually this year for the first time in nearly four decades because of the pandemic - to signal important shifts in monetary policy or the economic outlook.
A major question - particularly ahead of the Fed's September policy meeting - is whether the central bank will shift its inflation targets to an average, which would allow inflation to run higher before interest rates are raised.
Investors may also be on the lookout for signs that the Fed is looking at additional ways to bolster the economy should Congress fail to deliver a new pandemic relief package.
- Economic data to point to choppy recovery
The U.S. is to release data on July durable goods orders on Wednesday which is expected to show growth remained solid last month as the economy reopened.
Market watchers will also be keeping an eye on figures for new and pending home sales on Tuesday and Thursday, respectively. Real estate has been one of the bright spots of the economy during the pandemic with mortgage rates near record lows.
The economic calendar also features updates on personal income and spending, consumer confidence and consumer sentiment, along with Thursday’s weekly look at initial jobless claims. Claims unexpectedly rose back above the 1-million-mark last week’s report showed, a setback for a struggling U.S. job market.
- Republican convention begins
Markets will continue to follow developments in Washington as the Republican nominating convention for President Donald Trump gets underway on Monday. The convention is expected to culminate in a live acceptance speech from Trump on Thursday night on the South Lawn of the White House.
At last week’s Democratic convention speaker after speaker characterized Trump’s four years in office as chaotic. Trump countered on Friday that Democrats, not he, would bring chaos to the United States if Joe Biden wins the White House in November.
The conventions are happening against a background of a stalemate in talks between House Democrats and the White House over the next coronavirus aid bill as about 28 million Americans continue to collect unemployment checks.
- Another big week for stocks?
Last week was a big week for stocks, with the S&P 500 and Nasdaq both closing at record highs on Friday after the S&P 500 recouped all its losses caused by the coronavirus-driven slump. The Dow is still 6% below its all-time high in February.
Spurred by Fed buying of assets, stocks have rallied to record highs, while bond yields have been near record lows.
This week investors will await further clarity from the Fed on what more it can do to help the recovery, including details on possible changes to how it targets inflation.
- Twin storms in Gulf of Mexico to disrupt oil production
On Saturday oil producers began to shut down some crude production ahead of tropical storms Laura and Marco that are forecast to hit the Gulf of Mexico in coming days.
Storms Marco and Laura are poised to become hurricanes and make back-to-back landfalls along the central Gulf Coast by mid-week. It is rare to have two simultaneous storms in the region, but neither storm is expected to become a major hurricane, and their potential tracks cover a wide area of the Gulf Coast, said forecasters.
U.S. Gulf of Mexico offshore wells account for 17% of total U.S. crude oil production and 5% of total U.S. natural gas production. The region along the Texas to Mississippi coasts also accounts for 45% of total U.S. petroleum refining capacity.
--Reuters contributed to this report