Editor's PiCK
[New York Stock Briefing] All Eyes on Powell’s Words… The Three Major Indices Fall All at Once
Summary
- It was reported that all three major indices of the New York Stock Exchange declined simultaneously.
- Disappointing Q2 results from Walmart and caution ahead of the Jackson Hole Economic Symposium were said to have dampened investor sentiment.
- Although there were expectations for a September base rate cut, the probability decreased ahead of Powell's speech.
All three major New York stock indices declined. As Walmart’s Q2 earnings disappointed, overall investor sentiment was dampened. The downturn in tech stocks appeared to stabilize.
On the 21st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average (DJIA) closed at 44,785.5, down 152.81 points (0.34%) from the previous session. The S&P 500 Index fell 25.61 points (0.4%) to 6,370.17 compared to the previous day, and the NASDAQ Composite Index slipped 72.55 points (0.34%) to end at 21,100.31.
The S&P 500 Index has now fallen for five consecutive sessions. The selling trend among tech stocks showed signs of easing. All major tech companies except Alphabet Inc. fell, but the decline was not significant. The Philadelphia Semiconductor Index (SOX), which consists of semiconductor-related stocks, only dropped 0.5%.
Walmart declined by more than 4%. While Q2 sales exceeded expectations, net income fell short of market standards, freezing investor confidence. Costco also dropped 2%, and Target Corporation slid by more than 1%.
According to S&P Global, the preliminary U.S. Services Purchasing Managers' Index (PMI) for August came in at 55.4, down 0.3 points from July’s 55.7. It exceeded the market expectation of 54.2, maintaining the expansion trend. The preliminary Manufacturing PMI for August was 53.3, up 3.5 points from the previous month’s 49.8. This was the highest in 39 months and significantly above the market forecast of 49.5.
Employment showed signs of slowing. According to the U.S. Department of Labor, initial unemployment insurance claims for the week ending August 16 totaled 235,000 after seasonal adjustment, an increase of 11,000 from the previous week.
Vigilance remains high regarding the Jackson Hole Economic Symposium. The event is an important venue for gauging the monetary policy direction of the Fed. Fed Chair Jerome Powell is scheduled to speak on the 22nd.
Rick Gardner, CIO at RGA Investment, stated, "Ahead of Jackson Hole, prices are very high, and investors are expecting that Powell will hint at a rate cut in September," adding, "Given that trading volume is especially low in August and risk-averse behaviors are notable ahead of the weekend, if Powell’s comments fail to meet expectations, investors may withdraw some betting chips from the table."
According to the CME FedWatch Tool at the Chicago Mercantile Exchange (CME), the Federal Funds Futures market reflected a 73.5% chance of a 25 bp (1 bp = 0.01% point) rate cut in September. This is down from 82.4% at the previous session’s close. Caution has heightened ahead of Powell's remarks.
Reporter Young-Ki Jin, Hankyung.com young71@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
