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Analysis: U.S. stocks may not be ready for hawkish Powell at Jackson Hole, options data show

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Investors may be underestimating the degree of potential market turbulence stemming from the Federal Reserve's economic symposium at Jackson Hole, Wyoming, potentially leaving them more vulnerable to a hawkish surprise, options strategists said.

With many investors sitting on big year-to-date gains in stocks and bond yields pushing higher, investors may be caught flat-footed if a hawkish Powell spurs a run out of risky assets, Steve Sosnick, chief strategist at Interactive Brokers, said

Barring the market drop last year and a 2019 tumble, Fed chairs' Jackson Hole speeches have not been big market movers in recent years, with the S&P 500 logging an average swing of 0.9% on the day of the address over the last decade. This year's symposium also comes at a time when various asset classes have become more vulnerable to outsized moves following the Jackson Hole event, according to an analysis by derivatives strategists at Barclays.

 

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Why this abstract concept could rattle stocks when Powell speaks at Jackson HoleInvestors and traders are looking for Federal Reserve Chairman Jerome Powell to address where he sees the neutral rate of interest during his speech on Friday.
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