Fed’s Powell Speaks, Bears Feed On Losses


Simpler Trading Team

Aug 26th 2022  .  2 min read

In the overnight session both the Nasdaq futures and S&P 500 futures found themselves trading in a tight consolidation.

This range was created right where the futures market opened with no real movement up or down heading in the cash session. This could have been due to the anticipation of the annual Federal Reserve (Fed) symposium in Jackson Hole, Wyo., where Federal Reserve (Fed) Chairman Jerome Powell was set to speak.

At open both the bulls and the bears awaited the speech. The price action was volatile, yet very non-directional. This was until Powell delivered his speech at 9 a.m. Central.

Powell shook up the market in a wild way when he took the stage. In his speech, Powell acknowledged that the economy is slowing down. There was also the acknowledgement that there will be pain when it comes to combating inflation.

There will be “unfortunate costs of reducing inflation,” Powell said. This pain could be felt in both households and businesses.

The pain Powell referenced will be felt in the future, but Friday the pain was felt in the market. As his speech commenced, there was extreme volatility sending the market diving and then ripping back before the information was finally digested.

Once the information was digested, the bears took control and took it with force.

The remainder of the cash session was a string of strong selling and no looking back. The technology sector was hit harder than most. 

An interesting note to end the week is there is nothing to stall or hold the market up next week. If the bears want to continue this selling and take strong control of the market, they will have the opportunity. The information in the speech was bad, but the reaction was even worse.
At the close both the Nasdaq and the S&P 500 futures were heavily negative. The S&P 500 futures closed down 3.42%, losing 143 points, while the Nasdaq futures closed down 4.18%, a loss of 551 points. The Dow was down 1,008 points, losing 3.03%.

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