Stock indexes experienced a significant tumble of over 1% as investors anxiously awaited Federal Reserve Chair Jerome Powell’s forthcoming speech. The Nasdaq Composite took the biggest hit after significant gains earlier in the week. Nvidia, however, managed to hold its ground, albeit barely, after reaching a record high and announcing an impressive forecast, along with a $25 billion stock buyback plan.
All sectors of the S&P 500 demonstrated declines throughout the day, and the semiconductor index plummeted by 3.4%. At the annual symposium in Jackson Hole, Wyoming, central bankers and economic leaders convened to discuss various matters. The most anticipated event is Powell’s speech on the economic outlook, scheduled for Friday.
While Nvidia and the tech sector have performed well this year, market sentiment remains largely influenced by the Fed’s actions. Jake Dollarhide, CEO of Longbow Asset Management, suggests that investors are still preoccupied with Powell’s speech and fear that it could disrupt the market if it contains any surprises. This apprehension may lead to more selling than buying.
Investors had been optimistic about Nvidia’s upcoming report, expecting it to extend the rally in artificial intelligence tech stocks witnessed throughout the year. The stock market followed a similar trajectory, but as Thursday unfolded, the Dow Jones Industrial Average fell by 373.56 points (1.08%), the S&P 500 dropped 59.7 points (1.35%), and the Nasdaq Composite experienced a substantial decline of 257.06 points (1.87%).
Earlier on Thursday, data revealed that claims for unemployment benefits in the United States pointed towards a resilient job market. This news could potentially support the Fed’s hawkish stance on maintaining higher interest rates for an extended period. Consequently, Treasury yields slightly increased.
Philadelphia Fed President Patrick Harker’s remarks on CNBC also contributed to investor contemplation. Harker stated that the Fed would need to maintain restrictive rates for a while. Since March 2022, the Fed has been incrementally increasing rates as part of its strategy to curb inflation. Investors are now seeking clarity on whether further rate hikes are on the horizon and the expected duration of high rates.
Among the decliners for the day was Dollar Tree, with its shares plunging by 12.9% following the retailer’s forecast of annual profit that fell largely below expectations.
Overall, the volume of shares traded on U.S. exchanges amounted to 9.99 billion, slightly lower than the average of 10.87 billion over the last 20 trading days.
On the New York Stock Exchange, declining issues outnumbered advancing ones by a ratio of 2.95-to-1, while on the Nasdaq, a 2.61-to-1 ratio favored decliners.
The S&P 500 registered 10 new 52-week highs and 13 new lows, while the Nasdaq Composite recorded 35 new highs and 220 new lows.
It remains to be seen how the market will respond to Powell’s speech and whether it will alleviate concerns or introduce new uncertainties. As investors brace themselves, they will carefully analyze his insights and examine the potential impact on their investment decisions.
