TLDR:
- US equities ended lower on Tuesday, with all eyes on Fed minutes and upcoming remarks
- Stocks traded mixed globally as investors await US jobs data and Fed meeting minutes
- Dollar weakness paused after recent declines, while gold held near record highs
- Global shares paused after weeks-long rebound, with MSCI All Country index near lifetime high
- Markets pricing in significant interest rate cuts by the Fed this year and next
U.S. equities ended lower on Tuesday as investors eagerly awaited the release of Federal Reserve meeting minutes and upcoming remarks from Fed officials at the Jackson Hole Economic Symposium.
The Dow Jones Industrial Average dipped 0.2 percent to 40,834.97, while the Nasdaq fell 0.3 percent to 17,816.94, and the S&P 500 slipped 0.2 percent to 5,597.12.
Global markets showed mixed performance on Wednesday, with European stocks edging slightly higher and Asian markets experiencing a pullback. The STOXX index of 600 European companies rose 0.1 percent to 512.76 points, approaching its all-time high. In contrast, the MSCI All Country index for global stocks dipped 0.04 percent to 824.36 points, remaining less than 1 percent below its mid-July lifetime high.
Investors are closely watching for clues about the Federal Reserve’s future interest rate decisions.
Market expectations currently price in a 25 basis point rate cut in September, with a one-third chance of a 50 basis point cut. Overall, traders are anticipating nearly 100 basis points in cuts for this year and another 100 basis points next year.
The dollar’s recent weakness paused on Wednesday after several days of declines. This halt in the dollar’s slide kept gold prices steady near the record high reached on Tuesday. The euro has gained nearly 3 percent against the dollar in August, reaching its highest level since early December at $1.111.
In the bond market, the yield on the 10-year U.S. Treasury note decreased slightly to 3.81 percent, while the two-year yield hovered around 3.99 percent. These movements reflect ongoing investor speculation about the future path of interest rates.
Oil prices slipped due to easing tensions in the Middle East and estimates of increasing U.S. inventories. Brent crude futures were trading at $77.11 per barrel.
Attention is now turning to the release of preliminary revisions to U.S. labor data, expected later on Wednesday. Many economists anticipate a significant downward revision in job creation numbers, which could further support the case for interest rate cuts.
The Federal Reserve’s meeting minutes, set to be published on Wednesday, are expected to provide additional insights into the central bank’s thinking. Market participants are particularly focused on Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium on Friday, which could offer more clarity on the Fed’s stance regarding future rate cuts.
In corporate news, JD.com’s stock dropped 8.6 percent in Hong Kong trading after Walmart announced plans to sell its large stake in the company. This move impacted the broader Hong Kong market, with the Hang Seng index falling 0.8 percent.
Looking ahead, Thursday will bring the release of U.S. and global purchasing managers’ index surveys, which will provide further economic data for investors to assess.
The current market environment reflects a delicate balance between hopes for a “soft landing” in the U.S. economy and concerns about potential recession risks.
Investors are weighing the possibility of significant interest rate cuts without a corresponding economic downturn, a scenario that some analysts describe as a “Goldilocks” outcome.
