[New York Stock Market] Closes Mixed Near Flat as Investors Pause Ahead of Jackson Hole Meeting and Retail Earnings

Powell to Deliver Jackson Hole Speech on August 22: Will He Signal a Rate Cut?
Earnings Reports from Retailers Including Home Depot, Walmart, and Target
Peace Agreement Talks on Ukraine War Also in Focus

On August 18 (local time), the three major indexes on the New York Stock Exchange closed flat with little volatility. After last week's rally, investors appeared to be taking a breather, closely watching Federal Reserve (Fed) Chair Jerome Powell's upcoming speech at Jackson Hole and the earnings reports of major retailers scheduled for this week. Progress in peace agreement discussions regarding the war in Ukraine also emerged as a point of interest.

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On this day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, closed at 44,911.82, down 34.3 points (0.08%) from the previous trading day. The S&P 500, which tracks large-cap stocks, ended at 6,449.15, down 0.65 points (0.01%), while the tech-heavy Nasdaq finished at 21,629.774, up 6.797 points (0.03%).

This week, several major retailers are scheduled to announce their earnings. Large home improvement chains such as Home Depot and Lowe's, along with key consumer goods companies like Walmart and Target, will release their results. Investors are expected to gauge the health of U.S. consumer demand through these reports. According to market research firm FactSet, 92% of S&P 500 companies have reported earnings, and among them, 82% have exceeded Wall Street expectations.

The most anticipated event is the Jackson Hole meeting, taking place from August 21 to 23. Chair Powell is expected to provide clues about the future economic outlook and monetary policy direction in his speech scheduled for 10 a.m. on August 22. With the labor market continuing to weaken, the key question is whether Powell will signal a resumption of monetary easing-and if so, how large and how fast the rate cuts might be.

Chris Larkin, Managing Director at Morgan Stanley E*TRADE, said, "It appears that the current market is betting that signs of labor market weakness will outweigh inflation risks in the Fed's rate cut discussions."

The market largely considers a 0.25 percentage point rate cut at the September Federal Open Market Committee (FOMC) meeting to be a foregone conclusion. According to CME FedWatch, as of today, there is an 83.2% probability that the Fed will lower its benchmark rate, currently at 4.25-4.5% per year, by 0.25 percentage points in September.

However, some observers note that inflation and employment data for August are still to be released before the September FOMC meeting, suggesting that Chair Powell may adopt a cautious stance.

Before Powell's Jackson Hole speech, the minutes from the July FOMC meeting will be released on August 20, allowing investors to gauge the internal mood at the Fed. At last month's meeting, Fed Vice Chair Michelle Bowman and Fed Governor Christopher Waller both advocated for a 0.25 percentage point rate cut and cast dissenting votes against the majority decision to hold rates steady. This was the first time in 32 years that multiple dissenting votes were cast in an FOMC rate decision, which is typically unanimous.

In addition, public remarks from key Fed officials-including Vice Chair Bowman, Governor Waller, and Atlanta Fed President Raphael Bostic-are also expected. With divergent views on easing versus caution within the Fed, the market will look to these messages to assess the future direction of interest rate policy.

Geopolitical factors are also influencing the stock market. On this day, President Donald Trump met with Ukrainian President Volodymyr Zelensky and European leaders at the White House to discuss the possibility of a peace agreement to end the war in Ukraine, based on the agenda of the recent U.S.-Russia summit. President Trump is pressuring President Zelensky to accept a territorial exchange demanded by Russia, in exchange for the U.S. not directly participating in Ukraine's future security guarantees.

U.S. Treasury yields remained steady. The yield on the 10-year U.S. Treasury note, a global benchmark, stood at 4.33%, while the yield on the 2-year note was 3.76%, both up 1 basis point (1bp = 0.01 percentage point) from the previous trading day.

By stock, Meta, the parent company of Facebook, fell 2.27%. Microsoft and Apple declined by 0.59% and 0.3%, respectively. Novo Nordisk surged 6.63% after its obesity drug Wegovy was approved by the U.S. Food and Drug Administration (FDA) as a treatment for liver disease. Dayforce, a human resources software company, soared 26.02% amid speculation that it could be delisted after being acquired by a private equity fund.