(RTTNews) – Stocks fluctuated early in the session on Thursday before mostly lower over the course of the trading day. The major averages all moved to the downside on the day, with the S&P 500 closing lower for the fifth consecutive session.
The major averages finished the day off their worst levels but still in negative territory. The S&P 500 slid 25.61 points or 0.4 percent to 6,370.17, the Nasdaq fell 75.55 points or 0.3 percent to 21,100.31 and the Dow declined 152.81 points or 0.3 percent to 44,785.50.
The weakness on Wall Street partly reflected lingering uncertainty about the outlook for interest rates ahead of Federal Reserve Chair Jerome Powell’s highly anticipated speech at the Jackson Hole Economic Symposium on Friday.
Powell’s remarks could have a significant impact on the outlook for rates ahead of the Fed’s next monetary policy meeting in September.
“Powell is likely to keep his cards close to his vest, emphasize that the Fed cares very much about their dual mandate and explain that they are data dependent and will need to see the jobs report (9/5) and the two inflation reports (9/10-9/11) before they can make a determination whether or not to cut interest rates on September 17th,” said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
Ahead of Powell’s speech, CME Group’s FedWatch Tool is currently indicating a 73.6 percent chance the Fed will lower rates by a quarter point next month, down from 92.1 percent a week ago.
In an interview with CNBC, Kansas City Fed President Jeffrey Schmid expressed doubt about lowering interest rates in September, saying the central bank needs to “have very definitive data to be moving that policy rate.”
“In September, we’ll get around tables and we’ll collaborate and we’ll figure it out, but yeah, I think there’s a lot to be said between now and September,” he added.
A notable decrease by shares of Walmart (WMT) also generated some negative sentiment, with the retail giant tumbling by 4.5 percent after reporting weaker than expected second quarter earnings.
On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits rose by much more than expected in the week ended August 16th.
The report said initial jobless claims climbed to 235,000, an increase of 11,000 from the previous week’s unrevised level of 224,000. Economists had expected jobless claims to inch up to 225,000.
Sector News
Retail stocks saw significant weakness amid the steep drop by Walmart, dragging the Dow Jones U.S. Retail Index down by 1.2 percent.
Notable weakness was also visible among airline stocks, as reflected by the 1.0 percent loss posted by the NYSE Arca Airline Index.
On the other hand, gold stocks turned in a strong performance despite a decrease by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 2.0 percent to its highest closing level in over twelve years.
Oil service stocks also saw considerable strength amid a sharp increase by the price of crude oil, with the Philadelphia Oil Service Index climbing by 1.6 percent.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan’s Nikkei 225 Index slid by 0.7 percent, while Australia’s S&P/ASX 200 Index jumped by 1.1 percent.
The major European markets also ended the day mixed once again. While the French CAC 40 Index fell by 0.4 percent, the German DAX Index inched up by 0.1 percent and the U.K.’s FTSE 100 Index rose by 0.2 percent.
In the bond market, treasuries moved to the downside as traders look ahead to Powell’s speech. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.4 basis points to 4.330 percent.
Looking Ahead
Powell’s remarks are likely to be in the spotlight on Friday amid an otherwise quiet day on the U.S. economic front.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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