Powell to Deliver Jackson Hole Speech on August 22
Focus on Economic Outlook and Monetary Policy Remarks
Walmart Drops Over 4% as Q2 Earnings Miss Expectations
Kansas City Fed President Cautious on September Rate Cut
Weekly Jobless Claims Hit Two-Month High
The three major indices on the New York Stock Exchange declined on August 21 (local time). As investors adopted a wait-and-see approach ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Symposium, disappointing earnings from major retailer Walmart also dampened investor sentiment. Trading volume remained low due to the August summer holiday season, and the recent rally has heightened concerns over elevated stock prices.
As of 10:43 a.m. on the same day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was down 152.11 points (0.34%) from the previous session, standing at 44,786.2. The large-cap S&P 500 Index fell 17.29 points (0.27%) to 6,378.49, while the tech-heavy Nasdaq Composite slipped 43.264 points (0.2%) to 21,129.593.
By stock, Walmart plunged 4.18%. Although its quarterly revenue exceeded expectations, profit fell short of forecasts for the first time since May 2022, triggering selling pressure. Technology stocks, which had declined for two consecutive days, also showed overall weakness. Apple was down 0.35%, Meta dropped 1.22%, and Tesla fell 0.27%. Microsoft (MS) rose 0.3%.
The market is closely watching Chair Powell's speech at the Jackson Hole Symposium, which runs for three days starting today. Powell is expected to provide messages on the economic outlook and the future path of interest rates. The key question is whether he will align with market expectations for a rate cut in September or maintain his previous cautious stance. There are also predictions that, amid intensifying pressure from the White House for rate cuts, Powell may emphasize the central bank's independence.
The minutes from the July Federal Open Market Committee (FOMC) meeting, released the previous day, showed that most members believed it was premature to cut rates. The minutes stated, "Participants emphasized both the risks of rising inflation and declining employment," and "the majority viewed the risk of rising inflation as the greater threat." However, "some considered the downside risk to employment as the most significant threat," revealing internal differences of opinion.
David Russell, Global Market Strategist at TradeStation, said, "The Fed is concerned about companies passing tariffs onto consumers, which could accelerate inflation," and added, "The minutes are consistent with the hawkish comments Chair Powell made at the last meeting." He also predicted, "There could be developments at Jackson Hole that dampen the optimism of the bulls."
In a CNBC interview on the same day, Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City, also expressed a cautious stance on a September rate cut, stating, "We need very clear data to adjust policy rates right now." He added, "There will be a lot to discuss between now and September," indicating that key economic data such as August inflation and employment figures should be reviewed before making a rate decision. He continued, "The last stretch of bringing down inflation seems quite challenging," and noted, "Current inflation is closer to 3% than 2%, and there is still work to be done."
However, signs of a slowdown in the labor market continue to accumulate. According to the U.S. Department of Labor, new unemployment claims for the week of August 10-16 reached 235,000, the highest in two months and 9,000 above market expectations (226,000). Continuing claims for the week of August 3-9 totaled 1,972,000, exceeding the forecast (1,960,000) and marking the highest level in three years and nine months since November 2021.
U.S. Treasury yields are on the rise. The benchmark 10-year Treasury yield, a global bond market indicator, increased by 2 basis points (1bp = 0.01 percentage point) from the previous session to 4.32%. The 2-year Treasury yield rose by 3 basis points to 3.78%.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
