Stocks on Wall Street opened slightly lower on Tuesday, taking a breather after an impressive eight-day rally, as investors brace for Federal Reserve Chair Jerome Powell’s highly anticipated speech at the Jackson Hole symposium. The S&P 500 (^GSPC), which had enjoyed its longest winning streak since November, hovered near the flatline, while the Dow Jones Industrial Average (^DJI) also showed little movement. The Nasdaq Composite (^IXIC), dominated by tech stocks, dipped slightly, down 0.1%.
The modest retreat comes as traders and investors await Powell’s remarks at the annual central banking gathering in Jackson Hole, Wyoming, later this week. The market is eager for any clues that the Fed might not only begin cutting interest rates soon but could also consider deeper cuts than previously anticipated. This potential shift in monetary policy has been a key driver of the recent stock market rally, with investors betting on a more dovish stance from the central bank as economic data suggests a slowdown.
Over the past week, Wall Street has staged a robust recovery from an early August slump, fueled by fresh economic indicators that support the argument for a swift and potentially more aggressive easing of monetary policy. As the narrative shifts from whether the Fed will cut rates to how significant the cut might be, market participants are speculating on the possibility of a 0.5% rate reduction, rather than the more commonly expected 0.25%. Powell’s speech on Friday is expected to be a pivotal moment, potentially setting the stage for a significant policy shift in September.
“The focus is now squarely on the depth of the rate cuts,” said Mark Hamrick, Senior Economic Analyst at Bankrate. “With several Fed officials already signaling their openness to easing, the question is whether Powell will align with this dovish sentiment and how upcoming labor market data will factor into the Fed’s decision-making process.”
On the corporate front, Lowe’s (LOW) reported its quarterly earnings before the market opened, cutting its annual profit and sales forecasts. The home improvement giant, following in the footsteps of its competitor Home Depot (HD), cited muted consumer demand for big-ticket items as the primary reason for its lowered outlook. The slowdown in consumer spending, particularly on high-value purchases, has raised concerns about the broader health of the economy as interest rate discussions continue.
In the commodities market, gold (GC=F) resumed its upward march, climbing above $2,520 per ounce to reach another record high. The precious metal, often seen as a safe-haven asset, has surged more than 20% this year, driven by ongoing geopolitical tensions and the growing likelihood of rate cuts. Gold’s appeal as a non-interest-bearing asset increases in a low-rate environment, and its rally reflects investor anxiety over global economic conditions and the future direction of U.S. monetary policy.
As the week progresses, all eyes will remain on Jackson Hole, where Powell’s words could either reinforce the market’s optimism or introduce new uncertainty. For now, Wall Street appears content to hold its ground, with stocks stabilizing after their recent ascent. Investors are poised for what could be a defining moment for the markets as they await clear signals from the Fed on the path forward.
