[New York Stock Market] Taking a Breather Ahead of Jackson Hole Meeting... Nasdaq Down 0.33%

8 Trading Days of Consecutive Rally Followed by Cautious Stance
Focus on Powell's Jackson Hole Meeting Speech on the 23rd
Key Issue: Speed of Interest Rate Cuts

The three major indices of the U.S. New York Stock Exchange all closed lower on the 20th (local time). After an eight-day consecutive rally, investors took a breather as they closely watched the upcoming Jackson Hole meeting just two days away.

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On this day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at 40,834.97, down 61.56 points (0.15%) from the previous trading day. The large-cap-focused S&P 500 index fell 11.13 points (0.2%) to 5,597.12, and the tech-heavy Nasdaq index dropped 59.83 points (0.33%) to 17,816.94.

The previous day, the New York stock market saw the S&P 500 and Nasdaq indices rise for eight consecutive trading days, marking the longest rally this year. Early this month, fears of a recession caused by rising unemployment rates were alleviated, fueling the recovery rally. The continuous slowdown in inflation and robust retail sales data supported the market's rise. Subsequently, investors adopted a wait-and-see stance, turning the market bearish after nine trading days.

Matt Maily, Chief Market Strategist at Miller Tabak, explained, "It would be healthy for the stock market to take a break for a day or two," adding, "No market moves in a straight line."

Tom Heinlein, Senior Investment Strategist at U.S. Bank Wealth Management, said, "There was selling in stocks, investors reassessed the situation, and we returned to the fundamentals of the U.S. economy," adding, "We have seen investors return to the market once that happens."

The market is focusing on Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium on the 23rd. The Jackson Hole meeting, an annual economic policy symposium attended by central bank officials from major countries, will be held over three days starting on the 22nd in Wyoming. Investors are looking to gauge the extent of rate cuts within the year through Powell's speech. It is expected that the Fed may implement one or more 'big cuts' (0.5 percentage point rate cuts) in the remaining three FOMC meetings this year in September, November, and December. Currently, the federal funds futures market reflects a 65.9% probability that the Fed will make two baby steps (0.25 percentage point rate cuts) and one big step (0.5 percentage point rate cut) within the year.

Sam Stovall, Chief Investment Strategist at CFRA Research, analyzed, "The issue is not when the Fed will cut rates, but how much they will cut," adding, "Fed officials want to signal that they are not behind the curve but at the peak." He further stated, "At the same time, they do not want to be too aggressive in removing pressure before the fire is out," suggesting that the rate cut magnitude might be limited.

Before the Jackson Hole meeting, investors will be able to check the Fed officials' views on current monetary policy through the July FOMC minutes to be released on the 21st. On the 22nd, new unemployment claims data will be announced.

Government bond yields are declining. The U.S. 10-year Treasury yield, a global bond yield benchmark, fell 5 basis points (1bp = 0.01 percentage point) from the previous trading day to 3.81%, while the 2-year Treasury yield, sensitive to monetary policy, dropped 7 basis points to 3.99%.

By stock, cybersecurity company Palo Alto Networks surged 7.18% after announcing quarterly earnings and forecasts that exceeded market expectations. U.S. interior and building materials company Lowe's fell 1.18%, as sales missed expectations and annual profit forecasts were lowered due to slowing consumer spending, leading to a decline in its stock price. Bank of America (BoA) dropped 2.47%.

International oil prices declined due to easing tensions in the Middle East and forecasts of a slowdown in China's economy. West Texas Intermediate (WTI) crude oil closed at $74.04 per barrel, down $0.33 (0.4%) from the previous trading day, while Brent crude, the global oil price benchmark, fell $0.46 (0.6%) to $77.20 per barrel.