In the midst of midday trading on Thursday, US equity indexes experienced a decline, reflecting a growing sense of volatility leading up to the highly anticipated remarks from Federal Reserve Chair Jerome Powell, scheduled for Friday at the Jackson Hole Fed Symposium. The S&P 500 index dipped by 0.6%, settling at 5,584.2, while the Nasdaq Composite marked a slightly steeper decline of 1.1%, reaching 17,722.4.
The Dow Jones Industrial Average also faced downward pressure, falling 0.4% to 40,727.4. Observers noted that investors were notably reducing exposure to technology and consumer discretionary sectors, in contrast to energy stocks, which attracted buyers during the intraday trading session. In terms of market sentiment, the CBOE Volatility Index (VIX) has seen a resurgence, increasing by 8.1% to hit 17.58, signaling a growing unease among investors as they brace for Powell's comments. Key discussions are underway related to the Federal Open Market Committee's (FOMC) approach to interest rates.
Philadelphia Federal Reserve Bank President, Patrick Harker, emphasized during an interview with CNBC from Jackson Hole, Wyoming, that there is a pressing need for the FOMC to methodically begin lowering interest rates, with a possibility of doing so at the upcoming FOMC meeting scheduled for September 17-18.
Harker underscored that the Fed's commitment to rate reductions is more pivotal than the magnitude of the decreases themselves. Recently released minutes from the July monetary policy meeting of the Federal Reserve indicated a strong likelihood of a rate cut in September. These minutes reflect that a 'vast majority' of the policymakers concurred that easing monetary policy in September would be appropriate, provided that incoming data aligns with anticipations. Treasury yields offered a mixed response, with the 10-year yield climbing by 7.6 basis points to 3.85%, whereas the two-year yield surged to 4%, marking an increase of 7.3 basis points. On the economic front, the Kansas City Federal Reserve's monthly manufacturing index saw an improvement, rising to minus 3 in August from a prior figure of minus 13 in July, surpassing expectations set by a Bloomberg survey that anticipated a figure of minus 9. The pace of existing home sales in the United States also rebounded, posting a 1.3% increase to reach a seasonally adjusted annual rate of 3.95 million in July, improving from 3.90 million in June, following four consecutive months of decline.
This uptick aligns with figures reported in a Bloomberg survey which anticipated a rate of 3.94 million. In the realm of corporate developments, notable movements have occurred with major players such as Amazon.com. Amazon Web Services, a subsidiary of the e-commerce giant, announced plans to invest approximately $6.2 billion in Malaysia through 2038, coinciding with the launch of the AWS Asia Pacific (Malaysia) Region.
Amidst this announcement, shares saw a decline of 1.4% intraday, making it the second-worst performer on the Dow index. Additionally, Advance Auto Parts reported a more significant-than-expected drop in its fiscal Q2 earnings and subsequently revised its full-year outlook downward. The company also disclosed the sale of its Worldpac wholesale business to Carlyle for $1.5 billion in cash.
As a result, shares for the auto parts retailer plummeted 16% intraday. Meanwhile, West Texas Intermediate crude oil prices increased by 1.8%, trading at $73.24 a barrel. Overall, the landscape of US equities showcases a complex interplay of economic indicators and corporate news as investors navigate a climate of uncertainty..