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How the Fed’s Jackson Hole meeting has moved markets in the past

Yahoo Finance’s Jared Blikre breaks down how markets are moving ahead of the Fed’s Jackson Hole meeting.

Video Transcript


BRAD SMITH: Welcome back to "Yahoo Finance Live" this morning, everyone. We're about 10 minutes into the start of trading on this Friday, this Federal Reserve-- or Fed Chair Jerome Powell Friday, if you will. All right, anyway. Taking a look at the major averages, right now down for the S&P 500 and the NASDAQ. Dow, though, is holding onto some slight gains. For more, let's get on to Jared Blikre for a look at how the keynote speech at Jackson Hole traditionally tends to impact the markets. Jared.

JARED BLIKRE: Yes, well, it goes back over 40 years to the reign of inflation back in the day. But first, let's get a quick check of the markets. I'm going to repeat myself. Yesterday, I said a whole lot of nothing going on. So far, not a lot of action right there, 20 basis points down in terms of the NASDAQ, Dow up about 11 basis points.

But let's get to the main story. This is the S&P 500 over the last six months. Now, we had a nice rally from middle of June into the middle of August. We have come off a lot. These were some serious down days here, but we had a good day yesterday.

Now everybody's on pins and needles, as you said, Julie, waiting for Jerome Powell. Now, what's going to happen? Now, the Fed has been-- the Kansas City Fed has been hosting the symposium since 1982. They had a few before that in other locations not Jackson Hole but also in the same district.

And you can see-- now, this goes back since 1979 and past 20 years is this blue line. Now, there's a little bit of an upward drift after the event and then kind of takes off in September. Now, I think you could say this is back-to-school, back-to-office seasonality, maybe that's in play here. But nevertheless, Jackson Hole has been an event that has been looked to for years, and especially since 2010.

Now, in the wake of QE1-- and this goes back to about March of 2010. That was the end-- that was the tail end of QE1. We had the flash crash in here. That was one of the worst days in history for the stock market, although it did recover into the close. This was a 17% drawdown.

But in Jackson Hole, QE2 was discussed, and it was off to the races. We got a 30% rally into the beginning of 2011. It was not repeated in subsequent years who kind of had echoes of that or shadows. Nevertheless, I think this is what traders are thinking of when they are thinking about Jackson Hole being an important prospect for the markets.

Now, the Fed is going to be talking long term here. Chair is going to be talking long term, probably not anything instant. But if there's any effect on the dollar, watch the dollar, we could be off to the races to the upside or the downside.