The S&P 500 ended Thursday’s session in negative territory, with rising Treasury yields prompting investors to adopt a cautious stance ahead of Federal Reserve Chairman Jerome Powell’s anticipated speech at the Jackson Hole Symposium.
As of 4:00 p.m. ET (2000 GMT), the Dow Jones Industrial Average dropped 177 points, or 0.4%, while the S&P 500 declined by 0.8%, and the Nasdaq Composite slipped by 1.6%.
Anticipation Builds for Powell’s Address at Jackson Hole
Wall Street’s losses were largely driven by increasing Treasury yields, as market participants looked forward to Jerome Powell’s upcoming address at the Jackson Hole Symposium on Friday.
There is broad expectation among investors that Powell will reaffirm the Federal Reserve’s cautious approach, potentially paving the way for a rate cut in September. However, it remains uncertain whether Powell will clearly signal such a move.
“We anticipate that Powell will emphasize the significant progress made on inflation and express the Federal Open Market Committee’s (FOMC) confidence in continued progress over the coming year,” UBS commented in a note on Wednesday.
Ahead of Powell’s speech, Kansas City Fed President Jeffrey Schmid emphasized the need for more economic data before committing to any decisions regarding interest rate cuts.
Economic Data Raises Concerns Over U.S. Labor Market and Manufacturing
Earlier on Thursday, data revealed that new unemployment benefit claims in the U.S. increased by 4,000 to a seasonally adjusted 232,000 in the latest week, heightening concerns about a potential cooling in the U.S. labor market.
This follows Wednesday’s payroll revision, which indicated that the U.S. economy created 818,000 fewer jobs than initially reported for the 12 months ending in March 2024.
The revised job growth figure was nearly 30% lower than the original report, marking the largest downward revision since 2009.
Additionally, manufacturing activity fell more than expected, further contributing to economic concerns.
The minutes from the Fed’s late-July meeting, released on Wednesday, revealed that a growing number of policymakers are in favor of lowering interest rates due to progress in reducing inflation.
Citi analysts noted that a 50 basis points rate cut remains their baseline scenario for September, especially after the minutes showed increasing support for lower rates among Fed officials.
Stock Movements: Peloton Surges, Snowflake and Others Face Declines
Peloton Interactive (NASDAQ) shares soared by 34% after the connected fitness company returned to sales growth for the first time in nine quarters, signaling that its turnaround strategy is gaining traction.
In contrast, Snowflake (NYSE) saw its stock decline by 14%, despite surpassing expectations for second-quarter earnings and revenue. The company’s tepid guidance failed to reassure investors in an increasingly competitive market.
“Snowflake delivered solid results and raised its guidance, but we believe investors were looking for stronger incremental Product Revenue growth following their robust first quarter,” Truist Securities commented.
Williams-Sonoma Inc. (NYSE) dropped nearly 9% after reporting mixed quarterly results, with earnings missing expectations while revenue beat Wall Street estimates.
Advance Auto Parts (NYSE) saw its stock fall by more than 17% after reporting disappointing second-quarter earnings and lowering its full-year outlook. This drop came despite initial gains following Carlyle Group’s (NASDAQ) announcement that it would acquire AAP’s Worldpac unit for $1.5 billion in cash.
M&A Activity Boosts Paramount and Evolent Health
Paramount Global Class B (NASDAQ) rose by 1% after extending the “go shop” period of its merger agreement with Skydance, allowing the company to entertain rival bids. The company also confirmed receiving a competing offer from Edgar Bronfman Jr.
Evolent Health Inc. (NYSE) surged by 13% following a Reuters report that the healthcare services provider, with a market value of $3.3 billion, is in talks with private equity firms and other companies regarding a potential sale.
