US close: Stocks pull back ahead of Jackson Hole event

dl jerome powell generic 20240326 4 — Jerome PowellSharecast / public domain image

US stocks declined on Thursday as risk appetite was scaled back ahead of Federal Reserve chair Jerome Powell's hotly anticipated speech at the Jackson Hole economic symposium in Wyoming.

The Dow fell 0.4%, the S&P 500 dropped 0.9% while the Nasdaq tanked 1.7%, with investors taking profits following an impressive rally on Wall Street over the past two weeks.

Stocks gained the previous session after minutes from the Federal Reserve's July policy meeting indicated that the "vast majority" of central bankers said its September meeting would "likely" be the right time to lower its benchmark interest rate.

Meanwhile, the Labor Department's annual revision to non-farm payrolls data on Wednesday also helped market sentiment after it showed that the 818,000 fewer jobs were created than originally reported during the 12 months to 31 March, cementing expectations that a rate cut is imminent to ease the strain on the economy.

Market participants will now turn their attention to Powell's speech Friday, hoping to gain further insight into the future of US interest rate policy. While traders universally expect the central bank to lower rates at its September meeting, analysts seem to be split when it comes to just how large the reduction may be.

"The sharp downward revision to the BLS payrolls data highlighted just why the Fed are expected to ease next month, and the impending Jackson Hole appearance from Powell provides the basis for a fresh reminder of the pivot that looks to be around the corner," said Joshua Mahony, chief market analyst at Scope Markets.

In economic data, jobless claims rose by 4,000 to 232,000 in the week ended 17 August, a three-week high and slightly ahead of market expectations for a reading of 230,000.

A preliminary reading of S&P Global's composite PMI fell to 54.1 in August, down from 54.3 in July to a four-month low, with the manufacturing PMI falling to 48 from 49.6 and the services PMI ticking up to 55.2 from 55.

Meanwhile,, existing home sales rose by 1.3% to a seasonally adjusted rate of 3.95m in July, according to the National Association of Realtors, in line with expectations and bouncing back from the biggest drop in 19 months (-5.1%) in June.

Market movers

Shares in Peloton Interactive were up 35% to $4.55 after the struggling connected exercise equipment maker reported its first quarter of rising sales in more than two years. The stock, however, is still down 35% on where it was last year and just a fraction of the $150-160 price range seen back in 2021.

Advance Auto Parts tumbled 17% on the news it has agreed to sell Worldpac, its automotive parts wholesale distribution business, to private equity firm Carlyle for $1.5bn in cash.

Software firm Snowflake traded 15% lower despite beating expectations with its latest quarterly earnings and hiking full-year guidance, while clothing retailer Urban Outfitters also dropped 10% after posting disappointing second-quarter same-store sales figures.

Dow Jones - Risers

JP Morgan Chase & Co. (JPM) $216.63 0.95%
American Express Co. (AXP) $247.76 0.59%
Johnson & Johnson (JNJ) $162.35 0.57%
Walmart Inc. (WMT) $75.58 0.45%
Merck & Co. Inc. (MRK) $116.55 0.45%
Travelers Company Inc. (TRV) $217.86 0.43%
Chevron Corp. (CVX) $145.73 0.28%
Goldman Sachs Group Inc. (GS) $497.75 0.26%
Unitedhealth Group Inc. (UNH) $578.72 0.11%
Dowdupont Inc. (DWDP) $0.00 0.00%