Tech Stocks Lower Again Ahead of Jackson Hole – Nasdaq Down 0.7%
Tech stocks took another hit in trading on Wall Street yesterday, although some dip buying later in the day did soften the losses, as traders looked at tomorrow’s Fed update from Jackson Hole. The Dow Jones again closed near flat, up just 0.04% at 44,938, the S&P dropped 0.24% to 6,395, and the Nasdaq fell 0.67% to 21,172. Treasury yields had a quiet day, the 2-year closing flat at 3.748% and the 10-year 1.6 basis points lower at 4.291%, while the dollar also traded in relatively tight ranges, the DXY down just 0.02% on the day. Oil prices leapt higher as traders priced in lower-than-expected US inventories and a protracted process for a ceasefire in Ukraine, Brent up 1.73% to $66.93 and WTI up 1.70% to $62.82 a barrel. Gold also caught a bid on some haven demand, up 0.98% on the day to close out at $3,348.43 an ounce.
Jackson Hole Updates Crucial for US Markets
It feels like most of the trading week has been focused on events that will only really hit markets in the last session. Since Monday, it has seemed like most market commentators have been speaking about the impact of an anticipated update from Fed Chair Jerome Powell on Friday from Jackson Hole—and for good reason. The Fed Chair has traditionally used this forum to announce any changes in Fed evaluation methods and therefore give a strong indication on interest rate movements for the next year. Given the extraordinary financial year we have already had, and the obvious conflict between the Fed and the Trump administration, this year’s update has the potential to be explosive (not a word usually associated with central bank updates). The risk sits with the Fed becoming more cautious looking forward with regard to inflation concerns, which could put a dent in rate cut expectations and see some hard corrections in markets. We have already seen some falls in US stocks ahead of this update, but these could be seen as minimal if we do see a more hawkish outlook from Jay Powell tomorrow.
Purchasing Managers Data in Focus Today
There is a raft of Purchasing Manager data due out today across all jurisdictions, which investors will once again be keen to see in light of last month’s tariff updates. Flash Manufacturing and Services PMI data is due out from several countries, including Australia, France, Germany, the EU, the UK, and the US, and traders are expecting moves on the back of any data misses. There is little else out in the first two sessions of the day; however, we do have some further data scheduled out of the US in the New York session. The Weekly Unemployment Claims numbers (exp. 226k) and the Philly Fed Manufacturing Index data (exp. 6.8) are due out early in the session, and they are followed later by the Existing Home Sales numbers (exp. 3.92 mio). However, as long as the data is relatively close to expectations, expect US markets to remain in a holding pattern ahead of key updates from Fed Chair Jerome Powell at Jackson Hole tomorrow.
