In a volatile trading session on Thursday, US benchmark equity indexes experienced notable declines as investors digested remarks from two Federal Reserve officials and anticipated a critical speech from Chair Jerome Powell scheduled at the annual economic symposium in Jackson Hole, Wyoming. The Nasdaq Composite index witnessed a significant drop of 1.7%, settling at 17,619.4, while the S&P 500 index fell by 0.9%, closing at 5,570.6.
Meanwhile, the Dow Jones Industrial Average recorded a more modest loss of 0.4%, ending the day at 40,712.8. Within the sectors, technology stocks incurred the steepest losses, whereas the real estate sector emerged as the leader among gainers. Philadelphia Fed President Patrick Harker emphasized the need for the central bank's monetary policy committee to consider initiating a process to reduce the benchmark lending rate as early as this September.
During an interview with CNBC from Jackson Hole, Harker stated, "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 before making any definitive decisions." On the other hand, Kansas City Fed President Jeffrey Schmid shared his perspective, indicating that he does not perceive monetary policy as being "over-restrictive." It is noteworthy that Harker will have voting rights on the Federal Open Market Committee in 2026, while Schmid will exercise his voting rights in the upcoming year. All eyes are set on Powell, who is expected to address the symposium on Friday, potentially providing further insights into the central bank's direction. Adding to the market dynamics, minutes from the Federal Open Market Committee's (FOMC) meeting held on July 30-31 revealed that a significant majority of policymakers appear to support the notion that easing monetary policy in September may be warranted if forthcoming economic data aligns with expectations. In the bond market, the US two-year yield surged by 10 basis points to reach 4.02%, while the 10-year yield increased by 8.9 basis points, closing at 3.87%.
In company-specific news, the US Food and Drug Administration has granted emergency use authorization for updated mRNA COVID-19 vaccines developed by Moderna ($MRNA) and Pfizer ($PFE). Following this announcement, Moderna's shares fell sharply by 6.5%, marking the most substantial decline on both the Nasdaq and S&P 500 indices, while Pfizer's shares also experienced a decline, closing 0.8% lower. Advance Auto Parts ($AAP) reported a larger-than-anticipated decrease in its fiscal Q2 earnings, subsequently revising its full-year outlook downward.
The auto part retailer disclosed plans to sell its Worldpac wholesale business to Carlyle Group ($CG) for $1.5 billion in cash. Following this news, Advance Auto's shares plummeted over 17%, while Carlyle's shares dipped by 1.3%. In contrast, Peloton Interactive ($PTON) shares surged by 35% after the company's fiscal Q4 revenue exceeded expectations, and it projected gross margin expansion for fiscal 2025 despite anticipating softer sales in the current year. West Texas Intermediate crude oil prices increased by 1.4%, reaching $72.93 per barrel. In broader economic developments, the growth of US private-sector output hit a four-month low in August, reflecting persistent challenges within the manufacturing sector.
However, S&P Global's ($SPGI) flash purchasing managers' index indicated a slight improvement in the one-year outlook, alleviating some concerns. Chris Williamson, chief business economist at S&P Global Market Intelligence, noted, "The key takeaways from the survey are that inflation is slowly returning to normal levels and the economy faces risks of slowing down amid existing imbalances." Furthermore, the Kansas City Fed reported an unexpected improvement in manufacturing activity in the US Midwest, marking a transition into shallower contraction territory for this month as production levels improved. In the housing market, US existing home sales showed a month-over-month increase in July, reflecting a decline in unsold inventory, as indicated by data from the National Association of Realtors. The commodities market also saw fluctuations, with gold witnessing a decrease of 1.1%, settling at $2,518.50 per troy ounce, while silver prices fell by 2%, reaching $28.94 per ounce..