Market Analysis
The S&P 500 closed lower on Thursday, weighed down by rising yields as investors took a cautious stance ahead of Federal Reserve Chairman Jerome Powell's speech at Jackson Hole.
By 4:00 p.m. ET (2000 GMT), the Dow Jones Industrial Average had fallen by 177 points, or 0.4%, the S&P 500 was down 0.8%, and the Nasdaq Composite had dropped 1.6%.
Powell's Upcoming Speech at Jackson Hole
Wall Street losses were driven by increasing Treasury yields as investors anticipated Powell's address at the Jackson Hole Symposium on Friday. Market expectations suggest Powell might reaffirm the Fed’s dovish stance, potentially setting the stage for a September rate cut, though it remains uncertain if he will explicitly signal such a move.
UBS noted in a Wednesday report that they expect Powell to highlight significant progress on inflation and express confidence in continued progress in the coming year.
Ahead of Powell's speech, Kansas City Fed President Jeffrey Schmid indicated that he needed more economic data before backing any decision to reduce interest rates.
Jobless Claims and Manufacturing Activity Decline
Earlier Thursday, new data revealed a rise in U.S. jobless claims, with the number of new applications increasing by 4,000 to a seasonally adjusted 232,000, raising concerns about a weakening labor market.
This came on the heels of Wednesday’s payrolls revision, which showed the U.S. economy added 818,000 fewer jobs than initially reported for the 12 months through March 2024. The revised growth was about 30% less than originally estimated, marking the largest payrolls revision since 2009.
In addition, manufacturing activity fell more than expected.
Minutes from the Fed’s July meeting, released on Wednesday, showed that more policymakers are in favor of lowering interest rates as inflation has eased.
Citi analysts predict a 50 basis point rate cut for September, especially following the minutes which indicated increasing support for lower rates among officials.
Corporate Updates: Peloton, Snowflake, and More
Peloton Interactive (NASDAQ) shares surged 34% after the company reported its first sales growth in nine quarters, signaling a successful turnaround.
Snowflake (NYSE) saw its stock drop 14% despite beating earnings and revenue expectations for the second quarter. The company’s cautious guidance in a competitive market failed to reassure investors.
“Snowflake delivered strong results and raised its guidance, but investors expected more robust incremental Product Revenue following a strong first quarter,” said Truist Securities.
Williams-Sonoma Inc (NYSE) saw its stock fall nearly 9% after reporting mixed quarterly results, with earnings missing but revenue surpassing Wall Street estimates.
Advance Auto Parts (NYSE) shares plummeted more than 17% after the company reported disappointing second-quarter earnings and lowered its full-year outlook, overshadowing earlier gains from a $1.5 billion cash deal with Carlyle Group (NASDAQ) for its Worldpac unit.
M&A Activity Boosts Paramount and Evolent
Paramount Global Class B (NASDAQ) gained 1% following the extension of its "go shop" period related to its merger agreement with Skydance, allowing the company to consider rival offers. Paramount also confirmed receiving an alternative proposal from Edgar Bronfman Jr.
Evolent Health Inc (NYSE) rose 13% after Reuters reported that the healthcare services provider, valued at $3.3 billion, is in discussions with private equity firms and other companies about a potential sale.
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