On Thursday, equity markets in the United States faced declines, reacting to insights from two officials of the Federal Reserve while anticipating an address from Chair Jerome Powell at the prestigious annual economic symposium held in Jackson Hole, Wyoming. The Nasdaq Composite index experienced a notable drop of 1.7%, ending at 17,619.4.
Similarly, the S&P 500 fell 0.9% to settle at 5,570.6, while the Dow Jones Industrial Average saw a decrease of 0.4%, closing at 40,712.8. Among various sectors, technology endured the most significant setbacks, contrasting with real estate, which emerged as the leading sector for gains. Philadelphia Fed President Patrick Harker commented during an interview with CNBC from Jackson Hole, suggesting that the central bank's monetary policy committee is likely to commence a process of lowering its benchmark lending rate "this September." Harker elaborated, stating, "Right now, I'm not in the camp of 25 or 50 (basis-point cut).
I need to see a couple more weeks of data." On the other hand, Kansas City Fed President Jeffrey Schmid shared his perspective on CNBC, indicating that he does not consider current monetary policy to be "over-restrictive." It's worth noting that Harker is scheduled to be a voting member of the Federal Open Market Committee in 2026, while Schmid will have voting privileges in the upcoming year. Looking ahead, Powell's address at the Jackson Hole symposium is highly anticipated, particularly after the release of minutes from the FOMC's meeting held on July 30-31, which revealed a consensus among a "vast majority" of policymakers that easing monetary policy in September could be appropriate, provided incoming data aligns with expectations. In the realm of interest rates, the US two-year yield experienced an uptick of 10 basis points, reaching 4.02% on Thursday, while the 10-year yield rose by 8.7 basis points to stand at 3.86%. From an economic perspective, private-sector output growth in the US declined to a four-month low in August, driven by ongoing manufacturing weaknesses.
Nevertheless, the one-year headline outlook showed signs of improvement, as noted in S&P Global’s flash purchasing managers’ index, which operates under the ticker symbol $SPGI. Chris Williamson, the chief business economist at S&P Global Market Intelligence, emphasized that "the key takeaways from the survey are that inflation is continuing to slowly return to normal levels and that the economy is at risk of slowing amid imbalances." In good news for the Midwest region, manufacturing activity showed an unexpected improvement, entering into shallower contraction territory, as reported by the Kansas City Fed.
Meanwhile, existing home sales in the US saw a month-over-month increase in July, driven partly by a reduction in unsold inventory, according to data released by the National Association of Realtors. In the energy sector, West Texas Intermediate crude oil prices rose by 1.4%, reaching $72.94 per barrel. Turning to corporate developments, the US Food and Drug Administration granted emergency use authorization for updated mRNA COVID-19 vaccines produced by Moderna, denoted as $MRNA, and Pfizer, symbolized as $PFE.
Following this announcement, shares of Moderna declined 6.5%, marking the most significant drop on both the Nasdaq and the S&P 500, while Pfizer shares closed 0.9% lower. In other company news, Advance Auto Parts, abbreviated as $AAP, reported a sharper-than-expected decrease in its fiscal second-quarter earnings and subsequently lowered its full-year outlook.
The auto part retailer announced the divestiture of its Worldpac wholesale business to Carlyle Group, identified as $CG, for a notable sum of $1.5 billion in cash. Consequently, shares of Advance Auto fell nearly 18%, and Carlyle's stock slipped by 1.3%. Positive movements were observed for Peloton Interactive, referenced as $PTON, with shares surging by 35% following an unexpected rise in fiscal fourth-quarter revenue.
The company also provided optimistic guidance for gross margin expansion expected in fiscal 2025, despite predicting softer sales in the current year. In commodity markets, gold experienced a decline of 1.1%, settling at $2,519.80 per troy ounce, while silver fell 2% to reach $28.96 per ounce..