Focus on Powell's Speech on the 22nd
Treasury Yields Fall as Market Prices in September Rate Cut
Major Retailers' Earnings in the Spotlight This Week; Home Depot Up
The three major indexes on the New York Stock Exchange showed mixed trends in early trading on the 19th (local time). Investors are taking a wait-and-see approach ahead of Federal Reserve Chair Jerome Powell's upcoming speech at Jackson Hole this week, as there is a lack of clear catalysts in the market. Corporate earnings, including those of major retailers, are displaying mixed results.
As of 10:40 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 247.91 points (0.55%) at 45,159.73 compared to the previous session. The S&P 500, which focuses on large-cap stocks, was down 6.63 points (0.1%) at 6,442.52, while the tech-heavy Nasdaq was down 180.328 points (0.83%) at 21,449.446.
By stock, Home Depot, a major building materials distributor, was up 3.84%. Although its second-quarter earnings fell short of market expectations, the company maintained its annual outlook, attracting buying interest. Intel was soaring 7.78% on news that Japan's SoftBank would invest $2 billion in the struggling company to acquire about a 2% stake. Nvidia was down 2.33%.
The market is closely watching the earnings announcements of other major retailers amid aggressive tariff policies and related inflation expectations. This week, Walmart, Target, and Lowe's are scheduled to release their results, and investors are looking to gauge the trends in U.S. consumer spending through these reports.
Investors are also focused on Chair Powell's Jackson Hole speech. With central bank governors from around the world in attendance, Powell's speech is scheduled for 10 a.m. on the 22nd and is expected to deliver key messages regarding the U.S. economic outlook and monetary policy direction. Amid recent labor market slowdowns and mixed inflation forecasts, whether he will signal a rate cut is a key point of interest.
However, there is still the release of August inflation and employment data before the September Federal Open Market Committee (FOMC) meeting, so it is possible that Powell will take a cautious stance. There are also projections that if his remarks are more hawkish (favoring monetary tightening) than expected, the stock market could turn weaker.
The market currently sees a high probability of a rate cut in September. According to CME FedWatch, as of today, the probability that the Fed will lower its benchmark rate-currently at 4.25-4.5%-by 0.25 percentage points in September stands at 83.1%.
Richard Saperstein, Chief Investment Officer at Treasury Partners, said, "The Fed is likely to use the Jackson Hole meeting as an opportunity to prepare the market for a rate cut in September and an accommodative stance through the end of the year," adding, "Since this is likely Powell's last Jackson Hole meeting as Chair, he may also emphasize the central bank's independence."
Speeches scheduled for later today by Fed Vice Chair Michelle Bowman and, the following day, by Fed Governor Christopher Waller are also drawing attention. Both officials voted against the rate hold at the July FOMC, advocating for a rate cut, so the market is closely watching their subsequent remarks. Previously, Vice Chair Bowman argued that rates should be cut at all three remaining FOMC meetings this year. On the 20th, the minutes of the July FOMC will be released, providing insights into the Fed's internal rate discussions.
Geopolitical factors are also influencing the market. U.S. President Donald Trump met the previous day at the White House with Ukrainian President Volodymyr Zelensky and European leaders, agreeing to mediate direct talks between Russia and Ukraine. If the two countries reach an agreement on territorial issues and other matters, President Trump plans to hold a trilateral summit to sign a peace agreement.
U.S. Treasury yields are slightly lower amid expectations of a rate cut. The yield on the benchmark 10-year U.S. Treasury note was down 2 basis points (1bp = 0.01 percentage point) from the previous session at 4.31%, while the yield on the 2-year Treasury note was down 2 basis points at 3.74%.
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