Market Loses Confidence: Will Powell’s Speech Be the Salvation?
August 25, 2023 4:25 am
Index snapshot:
Dow dropped by 1.1%,
S&P 500 lost 1.4%,
Nasdaq proved to be the most vulnerable, falling by 1.9%.
Against this backdrop, Nvidia stood out among its tech sector peers, showing growth after hitting record highs earlier in the day. The company also pleased investors with an announcement of plans to buy back stocks worth $25 billion.
However, not all news was optimistic. Most of the S&P 500 sectors ended the day in the red, with the semiconductor index notably falling by 3.4%.
The economic atmosphere was tense as leaders from various central banks and economic heads gathered for the annual symposium in Jackson Hole, Wyoming. Powell’s upcoming speech, which could provide insights into the country’s future economic direction, is of significant interest.
Jake Dollarhide, head of Longbow Asset Management, highlighted the market’s sentiment, stating, “Regardless of Nvidia’s current success and the active interest in technology, the main question in the market is what position the Fed will take and what Powell will say. Their decisions and statements can dictate investors’ next moves.”
Thus, in the near future, the market’s primary focus will be on economic statements, and especially on comments from the Federal Reserve.
Throughout the week, market attention was fixated on Nvidia. In anticipation of its report, hopes that the company’s forecasts would act as a catalyst for growth in the AI sector maintained optimism.
However, on Thursday, investors turned skeptical. Dow Jones fell by 373.56 points to 34,099.42, S&P 500 lost 59.7 points, dropping to 4,376.31, and Nasdaq fell by 257.06 points, settling at 13,463.97.
Data on unemployment benefit claims presented on Thursday indicated a stable labor market performance. According to experts, this information could form the basis for a tighter Federal Reserve interest rate policy in the future. This, in turn, was reflected in the rise in yields of Treasury bonds.
Patrick Harker, President of the Federal Reserve Bank of Philadelphia, commented on CNBC, noting that the Fed might maintain rates at the current level for some time. Since March 2022, the Fed has been raising rates, targeting inflation, and the market seeks predictability in their actions.
On the corporate side, Dollar Tree shares dropped by 12.9%. This happened following the company’s annual forecasts, which fell below market expectations.
In terms of exchange activity, the trading volume in the U.S. reached 9.99 billion shares, slightly below the average for the last 20 trading days.
Commodity markets saw minor fluctuations. Gold prices dropped by 0.16%, reaching $1,800 per ounce (assuming the previous value was mistakenly given as $1.00). WTI oil decreased by 0.01% to $78.88 per barrel, while Brent dropped by 0.02%, settling at $83.19 per barrel.
As for the currency market, EUR/USD declined by 0.46% to 1.08, while the USD/JPY pair increased by 0.69%, reaching 145.84.
Lastly, the USD index rose by 0.59%, standing at 103.94.
The material has been provided by InstaForex Company – www.instaforex.com
Index snapshot:
Dow dropped by 1.1%,
S&P 500 lost 1.4%,
Nasdaq proved to be the most vulnerable, falling by 1.9%.
Against this backdrop, Nvidia stood out among its tech sector peers, showing growth after hitting record highs earlier in the day. The company also pleased investors with an announcement of plans to buy back stocks worth $25 billion.
However, not all news was optimistic. Most of the S&P 500 sectors ended the day in the red, with the semiconductor index notably falling by 3.4%.
The economic atmosphere was tense as leaders from various central banks and economic heads gathered for the annual symposium in Jackson Hole, Wyoming. Powell’s upcoming speech, which could provide insights into the country’s future economic direction, is of significant interest.
Jake Dollarhide, head of Longbow Asset Management, highlighted the market’s sentiment, stating, “Regardless of Nvidia’s current success and the active interest in technology, the main question in the market is what position the Fed will take and what Powell will say. Their decisions and statements can dictate investors’ next moves.”
Thus, in the near future, the market’s primary focus will be on economic statements, and especially on comments from the Federal Reserve.
Throughout the week, market attention was fixated on Nvidia. In anticipation of its report, hopes that the company’s forecasts would act as a catalyst for growth in the AI sector maintained optimism.
However, on Thursday, investors turned skeptical. Dow Jones fell by 373.56 points to 34,099.42, S&P 500 lost 59.7 points, dropping to 4,376.31, and Nasdaq fell by 257.06 points, settling at 13,463.97.
Data on unemployment benefit claims presented on Thursday indicated a stable labor market performance. According to experts, this information could form the basis for a tighter Federal Reserve interest rate policy in the future. This, in turn, was reflected in the rise in yields of Treasury bonds.
Patrick Harker, President of the Federal Reserve Bank of Philadelphia, commented on CNBC, noting that the Fed might maintain rates at the current level for some time. Since March 2022, the Fed has been raising rates, targeting inflation, and the market seeks predictability in their actions.
On the corporate side, Dollar Tree shares dropped by 12.9%. This happened following the company’s annual forecasts, which fell below market expectations.
In terms of exchange activity, the trading volume in the U.S. reached 9.99 billion shares, slightly below the average for the last 20 trading days.
Commodity markets saw minor fluctuations. Gold prices dropped by 0.16%, reaching $1,800 per ounce (assuming the previous value was mistakenly given as $1.00). WTI oil decreased by 0.01% to $78.88 per barrel, while Brent dropped by 0.02%, settling at $83.19 per barrel.
As for the currency market, EUR/USD declined by 0.46% to 1.08, while the USD/JPY pair increased by 0.69%, reaching 145.84.
Lastly, the USD index rose by 0.59%, standing at 103.94.
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: