On Thursday, stock indexes dipped as investors eagerly awaited remarks from Federal Reserve Chair Jerome Powell, set to speak at the Jackson Hole conference on Friday.
The S&P 500 and Dow Jones Industrial Average saw small declines, while the Nasdaq Composite took a larger hit, dropping by 1.6%. Treasury yields also rose, with the 10-year bond yield increasing by 8 basis points to 3.863%.
Investors are keen to hear any clues about future interest rate cuts, with the market fully expecting the Fed to start easing its monetary policy at next month’s FOMC meeting.
Minutes from the Federal Reserve’s July meeting, released on Wednesday, reveal that most officials believe a policy change in September could be appropriate if the economy continues to perform as expected.
The CME FedWatch tool shows that investors are almost certain the Federal Reserve will cut rates by 25 basis points next month, with a smaller chance of a 50 basis point reduction.
Goldman Sachs analysts noted on Thursday that Federal Reserve Chair Jerome Powell could still surprise the markets with either a more aggressive or cautious stance. David Mericle, an economist at Goldman Sachs, mentioned that Powell might express concerns about the labor market or suggest that the current fed funds rate might be too high, given the progress on inflation.
Meanwhile, markets were also reacting to the latest jobless claims data, which showed a slight increase to 232,000. This rise follows two weeks of declining claims after a weak July jobs report, which had earlier sparked recession fears.
Newly revised jobs data, released on Wednesday, reveals that the U.S. economy added 818,000 fewer jobs between April 2023 and March 2024 than previously reported.
On Thursday, additional data showed that sales of existing homes increased by 1.3% in July compared to June. However, this fell short of economists’ expectations of a 1.5% rise, according to a Wall Street Journal survey. The report also noted that the median price of existing homes dropped to $422,600 in July, down from the record high of $426,900 in June.