NEW YORK: Wall Street’s main indexes fell in volatile trading on Thursday, as rising Treasury yields pressured stocks ahead of Federal Reserve Chair Jerome Powell’s speech at Jackson Hole that could offer clues on the possibility of a rate cut next month.
The yields across government bonds perked up, with the yield on the 10-year note last at 3.8502% after falling for the last four sessions.
Most megacap and growth stocks slipped. Tesla was leading the losses with a 3.2% drop. The Philadelphia Semiconductor index also shed 2.4%.
Eight of the 11 major S&P sectors were trading lower, with consumer discretionary and information technology the biggest decliners.
Market participants are now focused on the Economic Symposium in Jackson Hole that kicked off on Thursday. Fed chair Jerome Powell is slated to speak on the second day of the event.
“Powell faces the potential to disappoint if not sufficiently dovish (i.e., further reinforcing the case for a near-term cut) which recent Fed governor testimonies have facilitated with their own dovish notes, but also pushing back against expectations of emergency rate cuts,” said Naomi Fink, chief global strategist at Nikko Asset Management.
Fed policymakers said on Thursday with inflation well below its highs, they were paying close attention to the US labor market to gauge when to begin reducing interest rates, with one saying they should move “soon.”
The benchmark S&P 500 notched its ninth session of gains out of 10 on Wednesday, after data showed US employers added far fewer jobs for the year ended March 2024 than originally estimated.
The labor market came under increased scrutiny following an unexpected rise in unemployment in July that sparked a selloff earlier this month. Risk sentiment has since improved following other reports hinting at a still resilient economy.
Money markets currently see a nearly 76% chance of an at least 25-basis-point (bps) cut in September, as per the CME FedWatch Tool, and about 100 bps of easing by December, according to LSEG data.
Meanwhile, latest data showed the number of Americans filing new applications for unemployment benefits ticked up in the latest week. A separate reading showed a slowdown in overall US business activity this month.
At 11:42 a.m. ET, the Dow Jones Industrial Average fell 120.41 points, or 0.29%, to 40,770.08, the S&P 500 lost 23.38 points, or 0.42%, to 5,597.47 and the Nasdaq Composite lost 145.63 points, or 0.81%, to 17,773.35.
Among individual stocks, data cloud analytics firm Snowflake raised its forecast for full-year product revenue. Still, Snowflake’s shares were down 13.7%, with analysts attributing the drop to the company not pairing the climb in revenue projections with a rise in margin forecast. Zoom Video Communications added 12.2% after raising its annual revenue forecast, while Advanced Auto Parts slid 16.5% after trimming its annual profit forecast.
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