Stock traders remained hesitant to make any huge bets ahead of Jerome Powell’s speech on Friday, which may provide clues on how hawkish the Federal Reserve will be in the face of mounting economic challenges.

After wandering aimlessly earlier Wednesday, the S&P 500 posted a small gain. For a second day in a row, the benchmark’s swing was capped within 1 per cent. Such a stretch of intraday calm occurred only three other times in 2022. Tesla Inc., which is getting ready to trade on a split-adjusted basis Aug. 25, pared most of its earlier rally. Treasury 10-year yields topped 3 per cent amid Fed jitters.

Those fears haven’t really gone anywhere despite the controversial dovish-pivot narrative cited as one of the reasons for the short-covering bounce from June lows. In fact, right ahead of the all-important Jackson Hole confab that will be attended by Powell and global policy makers, traders had to digest more hawkish talk. Fed Bank of Minneapolis President Neel Kashkari said late Tuesday it’s “very clear” that officials need to tighten and bring inflation back under control.

 “We don’t expect any shock-and-awe, Volcker-style, hyper-aggressive articulation by Powell or anyone else for that matter,” said Troy Gayeski, chief market strategist at FS Investments, referring to former Fed Chair Paul Volcker, who tipped the economy into recession to conquer inflation in the 1980s. “However, it’s very clear that the rally since the June bottom works directly against what the Fed has been trying to achieve, which is tighter financial conditions to slow economic growth and slow inflation. So they have to push back and they’ve been doing that clearly.”

Economic reports have been mixed at best, underlining the delicate task policy makers face in bringing down high inflation without sparking a recession. Data Wednesday showed US pending home sales fell to the lowest since the start of the pandemic. While orders placed with US factories for core capital goods beat forecasts, the picture might change in the coming months amid higher borrowing costs and uncertainty about the growth outlook.

Central banks that hike borrowing costs too aggressively to tame supply-driven inflation risk exacerbating price gains, according to Nobel laureate economist Joseph Stiglitz. Meantime, Guggenheim Partners Chief Investment Officer Scott Minerd is warning investors away from junk bonds and stocks because slowing economic growth and higher interest rates likely will produce deeper losses in risk markets.

In corporate news, Peloton Interactive Inc. rallied after agreeing to offer bikes and accessories on Amazon.com Inc. as part of a turnaround plan. Bed Bath & Beyond Inc. jumped after a report said that the home goods retailer has selected a lender to provide financing as it seeks to boost liquidity. Nordstrom Inc. tumbled after the retailer slashed its full-year outlook.

What to watch this week:

• US GDP, initial jobless claims, Thursday
• Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
• ECB’s July minutes, Thursday
• Fed Chair Powell speaks at Jackson Hole, Friday
• US personal income, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.3 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 0.3 per cent
• The Dow Jones Industrial Average rose 0.2 per cent
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was unchanged at US$0.9970
• The British pound fell 0.3 per cent to US$1.1799
• The Japanese yen fell 0.2 per cent to 137.10 per dollar

Bonds

• The yield on 10-year Treasuries advanced six basis points to 3.11 per cent
• Germany’s 10-year yield advanced five basis points to 1.37 per cent
• Britain’s 10-year yield advanced 12 basis points to 2.70 per cent

Commodities

• West Texas Intermediate crude rose 1.6 per cent to US$95.28 a barrel
• Gold futures rose 0.2 per cent to US$1,765.20 an ounce