Wall Street Slips as Investors Anticipate Federal Reserve Moves

"Markets Slip as Fed Signals Possible Rate Cuts and Economic Data Rattles Investors"

adminAugust 22, 20241 Mins read181 Views

U.S. stock markets experienced a downturn on Thursday, driven by investor uncertainty ahead of the Federal Reserve’s upcoming meeting at Jackson Hole.

Wall Street‘s main indexes closed lower, with the Dow Jones Industrial Average dropping by 0.45% to 40,707 points, the S&P 500 falling 0.63% to 5,585 points, and the Nasdaq Composite decreasing by 1.13% to 17,716 points.

The decline came after the Federal Reserve’s recent minutes hinted at potential interest rate cuts. The minutes indicated that most Fed policymakers believe a rate cut could be on the horizon, given that recent economic data aligned with expectations. Meanwhile, U.S. business activity has hit a four-month low, adding to market concerns.

In the job market, the number of new unemployment benefit applications has risen slightly, reflecting a cooling trend in the labor sector.

Tech stocks faced significant declines, with Intel Corp. shares falling 3.15% to $20.74 and Tesla Inc. shares dropping 2.58% to $217.50.

Oil and Gold Prices: Mixed Movements

Oil prices saw a rebound after a five-day decline. U.S. West Texas Intermediate (WTI) crude rose by 1.86% to $73.27 per barrel, and Brent crude increased by 1.83% to $77.44 per barrel.

The uptick in prices was driven by concerns over global demand and a recent drop in U.S. fuel inventories.

Gold prices, however, fell by more than 1% as the U.S. dollar strengthened and bond yields climbed. The drop in gold prices was influenced by a rebound in the dollar and rising bond yields.

Dollar Strengthens Ahead of Fed Announcement

The U.S. dollar rebounded from a 13-month low against the Euro on Thursday, ahead of the Federal Reserve Chairman Jerome Powell’s anticipated speech at Jackson Hole on Friday. The dollar index increased by 0.4%, recovering from recent lows.

The bond market saw the yield on the 10-year U.S. Treasury note rise by 8 basis points to 3.856%, up from 3.776% the previous day.

Interest rate futures now fully anticipate a 25-basis-point rate cut by the Fed in September, with a one-third chance of a larger 50-basis-point cut.

As the market awaits further clarity on the Federal Reserve‘s policy direction, investors remain cautious, monitoring both domestic economic indicators and global market trends.