After a tense day, US stock indices conclude with decreases.
Wall Street is on edge as Jerome Powell, the Fed Chair, is set to speak at Jackson Hole. What clues might he give regarding an interest rate increase? Stocks on Wall Street are dipping a day before the speech - yet some firms are grabbing investor attention.
Investors are jittery about the Dow Jones Industrial Average dropping 0.4% to 40,712 points. The S&P 500 and Nasdaq are also in the red, with a 0.9% fall to 5,570 points and a 1.6% dip to 17,619 points respectively.
Originally, investors were optimistic due to a slight rise in initial jobless claims and weak US industrial sentiment survey data. Central bankers are attempting to curb inflation and cool the scorching labor market without constricting the economy with excessively high interest rates. However, experts were hesitant: "The labor market is cooling, but the real question is by how much," stated Peter Cardillo, chief economist at NY-based asset manager Spartan. "We should wait for the August jobs numbers and view if the Fed will act more boldly then."
The Jackson Hole international central bank conference is the talk of the town. Investors are eagerly awaiting Jerome Powell's speech on Friday. In their latest meeting minutes, central bankers asserted considering a first interest rate cut. Furthermore, Fed representatives Patrick Harker and Susan Collins also expressed readiness for a relaxation step in September. "Yet, Powell could disappoint if he fails to bolster the case for an early interest rate cut," said Naomi Fink, chief strategist at Japanese asset manager Nikko.
Meanwhile, oil prices are bouncing back after setbacks. North Sea Brent crude and US WTI crude each rose about 1.4% to $77.10 and $72.92 per barrel (159 liters) respectively. "The oil market has stabilized, yet it remains challenged due to ongoing macroeconomic issues," commented George Khoury, manager at broker CFI. Predominantly, the economic slowdown in China is negatively impacting global demand.
You can read about the day's events on the Frankfurt trading floor in our market report.
Zoom shares saw a spike of almost 13%. The video conferencing solutions provider boosted its revenue outlook for the full fiscal year due to strong demand for its AI-powered tools. Investors also scooped up Paramount shares, which rose by around 0.8%. Media mogul Edgar Bronfman significantly upped his takeover bid for the US media conglomerate.
Struggling home fitness equipment maker Peloton saw a surge in shares, up 35%. Peloton's revenue improved by 0.2% in the last quarter, signaling the company's first growth quarter since 2022. Peloton has faced pressure since the end of the COVID-19 pandemic. "The numbers might be small, but it's also vital to consider that they reflect the summer months when customers are more likely to exercise outdoors," noted Zak Stambor from analysis firm Emarketer.
Microsoft shares experienced a 2% dip from the depots. In response to the surging significance of Artificial Intelligence (AI), the software giant is altering its accounting practices. However, as the revenues from this business are expanding at a slower pace than anticipated, the company recently lowered its revenue targets for the cloud division. High-performance computers in this division operate AI programs such as ChatGPT.
The Dow Jones Industrial Average's modest dip has raised concerns among investors. Jerome Powell's speech at Jackson Hole might provide insight into whether the Fed will consider an interest rate decrease to aid the economy.
Despite the Fed representatives expressing readiness for a relaxation step in September, investors are closely watching Powell's speech for any hints about the potential impact on the Dow Jones Industrial Average.
