4:05pm: Major indices all green
The Dow Jones Industrial Average extended a two-day rally ahead of Federal Reserve Chair Jerome Powell’s Jackson Hole speech on Friday.
At the close, the Dow was up 324 points, or 1%, at 33,292 points. Meanwhile, The S&P gained 1.4% to close at 4,199 and the Nasdaq advanced 1.7%, finishing at 12,639.
Even so, the major averages are on pace for a losing week. The Dow is down 1.2% so far, the S&P 500 is 0.7% lower and the Nasdaq Composite is down 0.5%.
12.05pm: Stocks snap three days of losses
The major US indices were in green territory at noon, supported by energy, bank and tech stocks, with Wall Street looking for changes in monetary policy in tomorrow’s speech by Federal Reserve chair Jerome Powell.
At noon, the Dow Jones Industrial Average was up 0.2% to 33,015, the S&P 500 was up by 0.6% at 4,166, while the Nasdaq Composite was up by 0.9% at 12,536.
Joshua Mahony, senior market analyst at online trading platform IG, said traders are awaiting the hotly anticipated update from US Federal Reserve chair Powell at Jackson Hole tomorrow.
Mahony noted that gains by Microsoft, Meta, Amazon, and Google brought a general healthiness to US markets, adding those companies could get hit if the Fed opts to increase their monetary path.
Between CEOs Raphael Bostic and Patrick Harker of the Federal Reserve Banks of Georgia and Philadelphia respectively, Mahony said there is a clear degree of indecision over whether the next move will be 50 or 75 basis points (bp).
“That outlook is echoed by markets, with the CME Fedwatch pricing a 44% of a 50 bp move, and 56% chance of an oversized 75 bp hike. Ultimately, markets await the views of one man, with Jerome Powell due to appear in Wyoming tomorrow to bring clarity over how he sees the Fed policy reacting to the economic crisis. Crucially, there is a risk that markets have already priced in any hawkish tilt, with a dovish stance likely to move markets to a greater extent should Powell lean in that direction,” Mahoney said in a statement.
At midday, the major movers included Pinduoduo, up by over 10%, while NetApp was up by 7%, and banks CitiGroup and Morgan Stanley both saw gains.
On the downside, Salesforce slid 6.2% on news it downgraded its annual revenue forecast, while Splunk was down over 10%, and Dollar Tree fell by 10%.
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9.35am: New employment data shows labor market remains relatively tight
US stocks opened slightly higher on Thursday as investors continued to hold off making any major moves ahead of Fed chair Jerome Powell’s speech at the Jackson Hole symposium tomorrow morning.
Just after the open, the Dow Jones Industrial Average had added 7 points or 0.02% at 32,976 points, the S&P 500 was up 14 points or 0.3% at 4,155 points, and the Nasdaq Composite had gained 77 points or 0.6% at 12,514 points.
Peloton Interactive Inc stock plunged about 15% at the open as the company reported a $1.2 billion loss and forecast further revenue declines in its latest quarterly earnings.
The stock finished yesterday up more than 20% following the news that the fitness brand’s products, including its exercise bike, were now available for purchase through Amazon’s US stores.
Meanwhile, initial jobless claims for the week ended August 20 indicate that the US labor market continues to remain relatively tight.
Claims for the week dropped by 2000 to 243,000, well below the market expectation of 252,000.
Pantheon Macroeconomics chief economist Ian Shepherdson commented that claims remained low and steady as seasonal distortions had faded.
“We have argued over the past two months that the claims numbers can’t be trusted in July because the seasonals can’t cope with the shifting timing and extent of the annual automakers’ retooling shutdowns,” he said. “The underlying trend is now re-emerging as the seasonal problems fade, and it shows that the trend in claims is about flat, at about 250,000.”
6.30am: Caution continues
US stocks were expected to start higher on Thursday, recovering further after all three major averages ended positively on Wednesday to snap a three-session losing streak.
Futures for the Dow Jones Industrial Average were 0.3% higher in pre-market trading, while those for the S&P 500 gained 0.5% and contracts for the Nasdaq 100 added 0.6%. On Wednesday, the Dow rose 0.2%, the S&P 500 added 0.3%, and the tech-heavy Nasdaq Composite gained 0.4%.
Investors remain cautious, however, ahead of the start today of the Federal Reserve’s Jackson Hole economic symposium, with Fed chair Jerome Powell scheduled to give the keynote address on Friday morning. Traders will be seeking more information about how the central bank will combat high inflation and if policymakers will cut rates when the current cycle is over.
Investors are also waiting for more economic data including the latest weekly jobless claims Thursday and the personal consumption expenditures (PCE) on Friday.
Richard Hunter, Head of Markets at interactive investor, commented: “The usual Thursday jobless claims number will give some further indications of a relatively tight labor market, while the Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures index, will reveal the current state of play tomorrow. Following the last reading, the release could give further substance as to whether there is any additional evidence of inflation nearing or indeed hitting a peak.”
“However,” he added, “the highlight of the week for investors is the Jackson Hole symposium and in particular the latest comments from Fed Chairman Powell when he speaks on Friday. Investors have been bracing for a reiteration of the Fed’s hawkish tone in continuing to raise rates to combat rampant inflation. Indeed, despite some emerging signs of slowing economic growth, caused in part by the rate hikes already undertaken, the Fed is expected to maintain its dogged determination to rein in inflation at all costs, with the next hike in September expected to be one of 0.75%.”
On the corporate front, shares of Nvidia shed 4.5% after-hours as it cut its third-quarter outlook after reporting below-forecast second-quarter numbers, while Salesforce shares fell 7% after it provided a disappointing forecast for fiscal 2023 although its second -quarter numbers beat forecasts.
Peloton will report its quarterly earnings before the bell on Thursday, along with Gap, Dollar Tree, and Dollar General. Ulta Beauty, Workday and Affirm Holdings will release results after markets close.
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