US stock indices closed broadly lower on Thursday, marking the S&P 500’s fifth straight decline and leaving the index down 1.2% for the week. Both the Dow and the NASDAQ lost 0.3%, while the Russell 2000 bucked the trend to close 0.2% higher.
Source: TN Trader
This move was consistent with the observation that investors have been lightening up of frothy, growthy tech stocks, and seeking out value in US small caps, such as those found in the Russell. But overall, selling pressure persisted across most sectors as investors positioned themselves ahead of Federal Reserve Chair Jerome Powell’s highly anticipated Jackson Hole address at 15:00 BST.
Markets now assign a 71% probability of a Fed rate cut at the September meeting, down from 84% earlier this week. This reflects investor concern that Mr Powell’s speech may prove to be quite hawkish in tone. This is his last Jackson Hole address before he steps down in May next year.
Some commentators have posited that he may take this opportunity to deliver a strong warning over tariffs or even let rip directly at President Trump given the latter’s sustained personal attacks on him, together with threats to the US central bank’s independence.
US stock index futures were weak overnight but pushed back into positive territory after the European open. The tone was subdued overall and reflected caution as traders await Mr Powell’s speech. The VIX pushed higher in a move which underscores growing investor unease following this week’s sell-off across US equities. Despite this, volatility remains relatively well contained, for now.
With key macro catalysts on the horizon, traders appear to be adding hedges, positioning for potential swings in response to Mr Powell’s remarks and President Trump’s comments expected later in the day.
