On the 20th (local time), the Standard and Poor's (S&P) 500 index and the Nasdaq index fell again following a decline the previous day as weakness in technology stocks continued. Investor sentiment was dampened after the Federal Reserve (Fed) confirmed concerns over inflation in the minutes of last month's meeting.
Only the Dow Jones Industrial Average rose slightly, while the New York stock market finished with mixed results for two consecutive days. Investors are watching the market direction ahead of Federal Reserve Chair Jerome Powell's speech at Jackson Hole.
On this day, the Dow Jones Industrial Average finished at 44,938.31, up 16.04 points (0.04%) from the previous trading day.
In contrast, the S&P 500 index, which is weighted by large-cap stocks, closed down 0.24% at 6,395.78, marking its fourth consecutive decline. The Nasdaq Composite Index, focused on technology stocks, also closed down 0.67% at 21,172.86, showing weakness for the second straight day.
Experts analyzed that there is a continued movement to realize profits on the technology stocks that have recently led the market. After the artificial intelligence (AI) rally, concerns about overvalued stocks have increased, and as the Fed's hawkish stance was reaffirmed, selling pressure intensified.
On this day, major technology stocks fell in succession. NVIDIA dropped slightly, while AMD and Broadcom each fell about 1%. Intel plummeted by more than 7%. Shares of big tech companies like Apple, Amazon, Alphabet, and Meta all closed lower.
Carol Slyfe, chief investment strategist for BMO Private Wealth, noted, "It is not surprising that investors are taking some profits on technology stocks," adding, "Late August generally sees lower transaction volume, which can increase market volatility."
The performance of distributors was mixed. Target, the big-box retailer, saw its stock plunge 6% amid falling sales and news of a change in CEO. In contrast, discount retailer TJX reported better-than-expected results, causing its shares to rise 4.5%.
Investors particularly focused on the minutes of the Federal Open Market Committee (FOMC) meeting held in July that were released that day. According to the minutes, a majority of Federal Reserve Commissioners judged that there are significant risks of rising inflation and that additional tightening may be necessary.
At that meeting, interest rates were held steady. However, Bloomberg reported that Federal Reserve Governors Christopher Waller and Michelle Bowman voiced dovish sentiments. Typically, hawkish refers to the inclination to raise the benchmark interest rate to rein in circulating currency and stabilize prices when signs of an overheating economy appear. In contrast, dovish refers to the perspective of lowering interest rates to inject money into the market and stabilize employment when there is a risk of economic slowdown. It is the first time since 1993 that two Federal Reserve Governors have expressed opposing views. This suggests intense internal contention over future interest rate policy direction within the Federal Reserve.
Investors are now turning their attention to the Jackson Hole Symposium in Wyoming, which will be held this weekend. There is a sense of anticipation regarding whether clues about future interest rate policy direction can be gleaned from Powell's speech on the 22nd.
David Russell, head of global market strategy at TradeStation, analyzed, "This meeting minutes are consistent with the hawkish remarks Powell made at the last meeting," adding, "Bullish advocates may face a setback at Jackson Hole."