Wall Street down as investors brace for Powell's speech

Wall Street’s main indexes have fallen as investors feared potentially hawkish remarks by the Federal Reserve chair that could spark volatility, while big-box retailer Walmart’s quarterly results dampened sentiment.

All eyes are on the Jackson Hole Economic Policy Symposium, where Fed Chair Jerome Powell is scheduled to speak on Friday morning.

Traders will closely monitor his speech for any clues on US interest rate cuts in September following recent job market weakness.

“We still have roughly 80 per cent likelihood that the Fed will cut interest rates, but that is now being brought into question. So that is, in a sense, being worked into investors’ forecasts,” said Sam Stovall, chief investment strategist at CFRA Research.

“Investors are saying, ‘You know what? Let’s take some profits right now.’”

Traders have pared down bets on a 25-basis-point interest rate cut in September to 79 per cent from 99.9 per cent last week, according to data compiled by LSEG.

Thin August trading volumes are likely to magnify any market moves following Powell’s comments.

Volume on US exchanges was 12.28 billion shares on Thursday, compared with the 17.08 billion average for the full session over the last 20 trading days.

“Jitters over what’s going to transpire tomorrow at Jackson Hole is certainly weighing on risk appetite a little bit with Chair Powell’s speech,” said Adam Turnquist, chief technical strategist for LPL Financial.

“There could be a decent sell-off if we get a more hawkish than expected event.”

Multiple policymakers, including Cleveland Fed President Beth Hammack, Atlanta President Raphael Bostic and Kansas City Fed President Jeffrey Schmid, have struck a cautious tone and acknowledged the need to stay data-dependent.

On Thursday, the Dow Jones Industrial Average fell 152.81 points, or 0.34 per cent, to 44,785.50, the S&P 500 lost 25.61 points, or 0.40 per cent, to 6,370.17 and the Nasdaq Composite lost 72.54 points, or 0.34 per cent, to 21,100.31.

A private report indicated business activity picked up pace in August, reflecting a complex environment for the US central bank, which will deliberate on interest rates next month. Another report also showed July sales of existing US homes unexpectedly ticked higher.

Yields on US Treasuries rose following the reports, also putting pressure on stocks.

Nine of the 11 S&P 500 sectors were down, led by consumer staples, which declined 1.18 per cent after Walmart raised its fiscal year sales and profit, driven by strong demand from shoppers across all income levels, but missed quarterly profit estimates and flagged higher costs from tariffs.

Shares of the retailer tumbled 4.5 per cent. The spotlight was on reports from retailers, including Target and Home Depot , this week as investors gauged the impact of US tariffs on consumer spending.

“There’s a bit of a mixed picture within the consumer space and there’s uncertainty in the economy - whether that’s the job market or whether that’s prices (increasing) from a tariff pass-through,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.

A technology stocks selloff earlier this week appeared to lose some steam, but Nvidia, Meta, Amazon.com and Advanced Micro Devices remained weaker.

The sell-off signal,led investor fears that tech stocks, which have soared from April lows, are overvalued, while Washington’s growing interference in the sector has also raised alarms.

Among other market movers, Coty shares plummeted 21.4 per cent after the beauty products maker forecast lower current-quarter sales on weak US spending.

Declining issues outnumbered advancers by a 1.6-to-1 ratio on the NYSE. There were 124 new highs and 46 new lows on the NYSE.

The S&P 500 posted six new 52-week highs and no new lows, while the Nasdaq Composite recorded 63 new highs and 101 new lows.