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Stocks slip in Europe, US ahead of Fed Chair Speech

Stocks slip in Europe, US ahead of Fed chair speech

Stocks slip in Europe, US ahead of Fed Chair Speech

Newslooks- NEW YORK (AP)

Stocks in the U.S. and Europe turned lower Friday ahead of a speech by the Federal Reserve chair that could more shed light on the potential for more interest rate hikes.

The DAX in Frankfurt fell 0.3% while the CAC 40 in Paris slipped 0.1%. The FTSE in London held onto a slight gain. Earlier, markets in Tokyo and Hong Kong advanced while Shanghai declined.

A person wearing a protective mask walks in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm Friday, Aug. 26, 2022, in Tokyo. Asian stock markets followed Wall Street higher on Friday ahead of speech by the Federal Reserve chair that investors hoped would shed light on plans for more interest rate hikes. (AP Photo/Eugene Hoshiko)

In the U.S., futures for all three major indexes declined, with the S&P 500 down 0.3%. The benchmark index gained 1.4% Thursday.

The focus is on Jerome Powell’s speech at the Fed’s annual Jackson Hole meeting later Friday. Investors and economists will be turning over his remarks for any clues about how fast the Fed may continue to raise its key interest rate — and for how long.

FILE – Federal Reserve Chairman Jerome Powell speaks to the Senate Banking, Housing and Urban Affairs Committee, as he presents the Monetary Policy Report to the committee on Capitol Hill, on June 22, 2022, in Washington. With inflation raging at a four-decade high and the job market strong, the Fed is under pressure to raise interest rates aggressively. (AP Photo/Manuel Balce Ceneta, File)

Traders worry the Fed’s rate hikes this year, plus increases by central banks in Europe and Asia, might derail global growth. Some expect the Fed to reverse course and start cutting rates in 2023 due to signs the U.S. economy might be cooling.

People wearing protective masks stand in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm Friday, Aug. 26, 2022, in Tokyo. Asian stock markets followed Wall Street higher on Friday ahead of speech by the Federal Reserve chair that investors hoped would shed light on plans for more interest rate hikes. (AP Photo/Eugene Hoshiko)

“The Fed could start thinking about a pause in rate hikes, potentially for the end of the year,” Thomas Costerg of Pictet said in a report. “However, it is still too early to talk about rate cuts.”

A person wearing a protective mask rides a bicycle in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm Friday, Aug. 26, 2022, in Tokyo. Asian stock markets followed Wall Street higher on Friday ahead of speech by the Federal Reserve chair that investors hoped would shed light on plans for more interest rate hikes. (AP Photo/Eugene Hoshiko)

Global markets have swung between optimism about stronger corporate profits and unease about possible recession risks.

On Thursday, the U.S. government reported the economy didn’t contract by as much as previously thought during the spring. It shrank 0.6% on an annualized basis, the government said, less than the previous 0.9% estimate.

People wearing protective masks stand in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm Friday, Aug. 26, 2022, in Tokyo. Asian stock markets followed Wall Street higher on Friday ahead of speech by the Federal Reserve chair that investors hoped would shed light on plans for more interest rate hikes. (AP Photo/Eugene Hoshiko)

The Fed’s Jackson Hole meeting in Wyoming, which attracts economists from around the world, has been the setting for market-defining announcements in the past.

Investors are hoping for clarity from Powell after a number of Fed officials said they still supported rate hikes despite hopes inflation might be peaking.

jerome powell
Federal Reserve Board Chair Jerome Powell speaks during the Inaugural Conference on the International Roles of the U.S. Dollar at Federal Reserve Board Building, in Washington, Friday, June 17, 2022. (AP Photo/Jose Luis Magana)

In energy markets, benchmark U.S. crude gained $1.13 to $93.65 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international trading, advanced $1.26 to $99.75 per barrel in London.

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