The U.S. equity market presented a mixed outlook on Tuesday night, with investors eagerly anticipating insights into the Federal Reserve’s rate plans at the forthcoming Jackson Hole symposium. Eyes are focused on Fed Chair Jerome Powell’s Friday address at the annual central bankers’ gathering in Jackson Hole, Wyoming.
Despite aggressive rate measures that have driven the annual inflation rate from about 9 percent down to 3 percent, analysts expect Powell to remain committed to the Fed’s 2% inflation target.
Housing Market: Existing home sales in the U.S. slipped more than anticipated in July, marking a 2.2% sequential decline to an annual rate of 4.07 million units, lower than the expected 4.15 million or 0.2% drop. Rising mortgage rates and increasing prices, combined with ongoing inventory issues, were cited as contributing factors by the National Association of Realtors.
Manufacturing Sector: Despite improvements in August, manufacturing activity in the U.S. Mid-Atlantic region remains in contraction territory, as new orders and shipments haven’t fully recovered, according to the Richmond Fed.
Equities: The Dow Jones Industrial Average closed 0.5% lower at 34,288.3, and the S&P 500 shed 0.3% to 4,387.6. Conversely, the Nasdaq Composite edged up 0.1% to 13,505.9.
Currencies: The U.S. Dollar index rose 0.2% to 103.57, nearing last week’s two-month peak of 103.68, as worries over China’s economy and expectations of sustained U.S. interest rates buoyed the currency. Meanwhile, GBP/USD slipped 0.1%, and EUR/USD hit a two-month low before slightly recovering.
Commodities: WTI crude oil settled lower by $0.37 at $80.35/bbl, and Brent crude was down $0.52 to $83.94, amid expectations of weak Chinese demand and increased supply. Gold managed to hold critical support at $1,926/oz, up 0.12%, despite rising bond yields reaching a 15-year high at 4.36%.
China’s economic slowdown and U.S. interest rates remain high, driving up Treasury yields to near 16-year peaks. Additionally, risky assets were impacted last week, while the Japanese Yen faced pressure. On the geopolitical front, the BRICS meeting is currently underway in Johannesburg, South Africa, attracting traders’ attention.
The cryptocurrency market continued its downward trajectory, with Bitcoin (BTC/USD) falling 0.87% to 25,897 and Ethereum (ETH/USD) declining 2.5% to $1,630, extending their 30-day slump to over 13%.
Investors remain vigilant as the week progresses towards the key Jackson Hole Symposium, where further indications on interest rates and monetary policy may be provided. The outcome of the Symposium could instigate significant market movements, depending on the sentiments conveyed by Federal Reserve officials.