Major indexes fall 1%, focus shifts to upcoming Powell speech
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[August 25, 2023] By
Caroline Valetkevitch
NEW YORK (Reuters) - The three major U.S. stock indexes ended down more
than 1% each on Thursday, led by a drop in the Nasdaq after this week's
sharp gains and as investors were nervous ahead of Federal Reserve Chair
Jerome Powell's speech Friday.
Shares of Nvidia ended barely higher after they hit a record high early
in the session. The company late Wednesday gave a much
stronger-than-expected forecast amid demand for its artificial
intelligence chips and said it would buy back $25 billion in stock.
All of the major S&P 500 sectors were down on the day, however, and an
index of semiconductors dropped 3.4%.
Central bankers and other economic leaders gathered Thursday for an
annual symposium in Jackson Hole, Wyoming. Powell's highly anticipated
speech on the economic outlook is due Friday.
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"As much as investors want to focus on Nvidia and want to focus on tech
- and it's been a good year so far - this is still a market that is Fed
obsessed. This is still all about what is Jay Powell going to say
tomorrow to mess things up... that may lead investors to be sellers
instead of buyers," said Jake Dollarhide, chief executive officer of
Longbow Asset Management in Tulsa, Oklahoma.
The market had gained along with Nvidia this week ahead of the company's
report on hopes that its forecast could extend this year's artificial
intelligence tech stock rally.
The Dow Jones Industrial Average fell 373.56 points, or 1.08%, to
34,099.42, the S&P 500 lost 59.7 points, or 1.35%, to 4,376.31 and the
Nasdaq Composite dropped 257.06 points, or 1.87%, to 13,463.97.
Data earlier Thursday showed claims for U.S. unemployment benefits
pointed to a still-strong jobs market, news that some say could support
the Fed's hawkish message of higher interest rates for longer. Treasury
yields edged higher.
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People are seen on Wall Street outside
the New York Stock Exchange (NYSE) in New York City, U.S., March 19,
2021. REUTERS/Brendan McDermid/File Photo
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Investors also digested comments from Philadelphia Fed President
Patrick Harker, who in an interview on CNBC on Thursday said the Fed
will need to keep rates restrictive for a while.
The Fed has been raising rates since March 2022 in an effort to
bring down inflation, and investors are looking for clarity on
whether more rate increases are ahead and how long the Fed plans to
hold rates high.
Among the day's decliners, Dollar Tree shares dropped 12.9% after
the retailer forecast annual profit largely below estimates.
Volume on U.S. exchanges was 9.99 billion shares, compared with the
10.87 billion average for the full session over the last 20 trading
days.
Declining issues outnumbered advancing ones on the NYSE by a
2.95-to-1 ratio; on Nasdaq, a 2.61-to-1 ratio favored decliners.
The S&P 500 posted 10 new 52-week highs and 13 new lows; the Nasdaq
Composite recorded 35 new highs and 220 new lows.
(Additional reporting by Amruta Khandekar, Shreyashi Sanyal and
Shristi Achar A in Bengaluru; Editing by Savio D'Souza, Shinjini
Ganguli and Deepa Babington)
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