The momentum of the big tech rally diminished due to an increase in bond yields. Traders sifted through comments from various Federal Reserve officials and were anticipating Jerome Powell’s upcoming speech on Friday for indications about the direction of interest rates.
While the S&P 500 gave up its gains, the Nasdaq 100 declined by over 1%—despite having shown a similar degree of growth earlier in the day. Notably, major tech giants such as Tesla Inc. and Apple Inc. experienced drops of at least 1.8%. Additionally, Nvidia Corp. scaled back much of its earlier progress that had led the chipmaker to achieve an all-time high.
David Trainer, CEO of New Constructs, an investment research firm in Nashville, stated, “Nvidia is becoming akin to Tesla in the stock market, where an excessively high and unrealistic valuation is blindly assigned by the market. While we acknowledge Nvidia’s excellence as a company, we are underscoring that its valuation is exceedingly inflated and untenable.”
Market participants were also getting ready for the annual meeting of prominent central bankers in Jackson Hole, Wyoming. Jerome Powell, the head of the Federal Reserve, is scheduled to give a speech at 10:05 a.m. Washington time on Friday. It is expected that Powell will utilize this opportunity to outline the approach that policymakers will adopt in evaluating whether to raise rates and determine when rate cuts might be appropriate.
Patrick Harker, President of the Federal Reserve Bank of Philadelphia, envisages maintaining interest rates for the rest of the year, believing that policymakers have taken adequate steps to tighten policies. Harker mentioned on CNBC, “We’ve likely done enough.” Meanwhile, James Bullard, former President of the Federal Reserve Bank of St. Louis, suggested that an accelerating US economy could lead to higher borrowing costs.
The yield on two-year Treasury bonds, which tends to react more swiftly to impending policy changes, remained close to 5%. The US dollar strengthened against its counterparts in developed markets.
Key Developments in the Corporate Sector: Boeing Co. and its primary supplier, Spirit AeroSystems Holdings Inc., encountered declines after Boeing disclosed issues related to improperly drilled holes in a component that plays a role in maintaining cabin pressure within the 737 Max aircraft. Snowflake Inc. witnessed a decrease after offering a sales forecast for the current quarter that aligned with expectations. This indicates that companies are exercising caution when expanding their budgets for cloud software. Dollar Tree Inc. experienced a slip as its projected earnings fell below analyst estimates. The company is grappling with challenges such as elevated wages and a sales mix that is less profitable. This comes a year after Dollar Tree introduced a higher price point. T-Mobile USA Inc. is in the process of cutting 7% of its workforce. This step is part of the company’s effort to manage costs, especially considering the substantial spending it has undertaken to attract new subscribers in an increasingly competitive market.
Prominent Events This Week:
Tokyo Consumer Price Index in Japan, scheduled for Friday Consumer Sentiment Index from the University of Michigan in the US, set for Friday Addresses by Fed Chair Jerome Powell and ECB President Christine Lagarde at the Jackson Hole conference, due on Friday
Key Market Movements:
Stocks
The S&P 500 declined by 0.6% as of 11:36 a.m. New York time The Nasdaq
100 decreased by 1.3%
The Dow Jones Industrial Average fell by 0.4%
The Stoxx Europe 600 dropped by 0.4%
The MSCI World index saw a 0.4% decline
Currencies
The Bloomberg Dollar Spot Index gained 0.3%
The euro dropped by 0.3% to $1.0832
The British pound declined by 0.7% to $1.2636
The Japanese yen fell by 0.6% to 145.68 per dollar
Cryptocurrencies
Bitcoin experienced a 2% decrease to $26,063.83
Ether declined by 2.3% to $1,645.56
Bonds
The yield on 10-year Treasuries increased by two basis points to 4.21%
Germany’s 10-year yield remained relatively unchanged at 2.52%
Britain’s 10-year yield decreased by four basis points to 4.43%
Commodities
West Texas Intermediate crude dropped by 0.2% to $78.75 per barrel
Gold futures exhibited little change
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