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Jackson Hole: All Talk, No Market Action


Today's financial recap and tomorrow's financial outlook.

The S&P 500 traded sideways as the the annual central bankers' conference in Jackson Hole Wyoming kicked off.

Federal Reserve Chair Janet Yellen's speech on the labor market was front and center on traders' minds.

Yellen stayed the course in terms of emphasizing data dependency, saying that the Fed "will be closely monitoring incoming information on the labor market and inflation in determining the appropriate stance of monetary policy".

Yellen discussed the difficulty in determining appropriate policy given current US labor market trends. She acknowledged that the unemployment rate has improved more rapidly than the Fed has anticipated, but also identified ongoing challenges like weak income growth and high levels of underemployment.

The Fed may allow inflation to run above the current 2% target to achieve its labor market goals. But there was a hawkish caveat to that revelation, as too much accommodation could later result in an abrupt tightening of monetary policy.

European Central Bank President Mario Draghi promoted tax cuts and increased government spending to help jump start Eurozone economic activity, even at the risk of inflation. He also emphasized the ECB's ongoing readiness to use "unconventional measures" to head off long-term economic damage.

Ukraine remained a source of tension.

Russia sent a convoy of over 200 trucks, supposedly on a humanitarian mission, into Ukraine, which was deemed an "unauthorized entry" by the Pentagon. NATO officials said that Russia also moved artillery units inside Ukraine and was using them for attacks.

Elsewhere, US deputy national security adviser Benjamin Rhodes said direct military action could be taken against ISIS to protect American interests in the Middle East.

Despite all the headlines, market activity was fairly muted, with the 10-Year US Treasury yield dropping slightly.

The S&P 500 fell just 0.2%, while the NASDAQ finished up 0.1%, aided by Apple (AAPL) rising to hit an all-time intraday high of $101.47. The strong biotech sector also helped keep the NASDAQ above water.

Gold saw volatility intraday courtesy of Jackson Hole, but the +0.5% move for the day was far from dramatic.

In earnings news, Foot Locker (FL) beat analysts' second-quarter revenue and earnings expectations.

Tomorrow's Financial Outlook

There are no major companies reporting earnings Monday, though momentum traders may be watching Chinese internet company Qihoo 360's (QIHU) result due before the open.

In US economics, the July New Home Sales report will be issued at 10:00 a.m. ET.

Twitter: @Minyanville

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