On the 21st (local time), the New York stock market fell across the board ahead of Federal Reserve Chair Jerome Powell's speech at Jackson Hole. The Standard and Poor's 500 index recorded its longest decline this year with five consecutive trading days of losses.
On that day, the Dow Jones Industrial Average fell by 153 points (0.3%) compared to the previous transaction.
The large-cap centered S&P 500 index dropped 0.4%, and the tech-heavy Nasdaq composite index also fell 0.3%, closing lower.
Experts analyzed that the market is showing an extremely cautious attitude ahead of Powell's speech at Jackson Hole. In particular, the manufacturing indicators released on that day performed better than expected, which is likely to weigh on interest rate cuts. The preliminary reading of the August U.S. manufacturing purchasing managers' index (PMI) announced by S&P Global soared at the fastest rate since 2022, interpreted as a sign that inflationary pressures may still exist. This could serve as a justification for the Federal Reserve to avoid rushing into interest rate cuts.
In fact, on that day, the voices of hawks (preferring currency tightening) within the Federal Reserve grew stronger. Cleveland Federal Reserve President Loretta Mester said, "If a decision must be made tomorrow, I would not support currency easing." Raphael Bostic, president of the Atlanta Federal Reserve, also reiterated his existing position that one interest rate cut this year would be appropriate.
Amid this atmosphere, market expectations for an interest rate cut also weakened. According to the Chicago Mercantile Exchange (CME) FedWatch, the possibility of a rate cut in September dropped from over 90% a week ago to about 70% on that day.
Among individual stocks, Walmart's share price fell by more than 4%, shocking the market. Walmart's quarterly sales exceeded market expectations, but its net profit fell below expectations for the first time since May 2022.
The weakness in tech stocks also continued. Major tech stocks, such as Nvidia, Palantir, and Meta, which had led the stock market recently, mostly fell. UBS Global Asset Management analyzed in a report that "as the AI rally matures, the recent correction serves as a timely reminder for investors to diversify their portfolios and maintain balance."
Investors are focused on Powell's speech at Jackson Hole, which starts at 11 p.m. on the 22nd Korean time. Federal Reserve chairs attend an economic policy symposium held by the Kansas City Federal Reserve in Jackson Hole, Wyoming, at the end of August each year to present the direction of future currency policy.
RGA Investment's Chief Investment Officer (CIO) Rick Gardner noted, "Ahead of Jackson Hole, investors have very high expectations that Powell will hint at a rate cut in September," adding, "If remarks fall short of that, investors may engage in profit-taking, particularly considering that August typically has lower transaction volume and the tendency to avoid risk ahead of the weekend."