On Friday, before the stock market officially opened, the futures contracts that predict how the U.S. stock market would perform showed a mixed picture. This was because investors were waiting to hear what Federal Reserve Chairman Jerome Powell would say in his speech at the Jackson Hole event.
The futures tied to the Dow Jones Industrial Average, which is a measure of stock performance, went up by 62 points or about 0.18%. The futures linked to the S&P 500, another stock performance indicator, stayed mostly unchanged, while the futures connected to the Nasdaq 100, which represents tech companies, went down by 0.27%.
On the previous day, the stock market initially went up after Nvidia, a tech company, reported strong financial results. However, later in the day, the market turned negative as investors became more careful and uncertain before Jerome Powell’s speech.
The Dow, a well-known stock index, had its worst performance since March, meaning it went down significantly. Similarly, the broader market index and the Nasdaq Composite, which includes many technology companies, experienced their biggest losses in a single day since August 2nd.
Weekly Market Recap
In spite of the declines observed on Thursday, both the S&P 500 and Nasdaq are maintaining their gains for the week, with increases of 0.2% and 1.3% respectively. If these two measures succeed in finishing the week with positive numbers, it will mark the end of a 3-week period of losses.
The Jackson Hole Economic Symposium, held in Wyoming, serves as a platform for central bankers and significant financial figures from around the world to convene. In the previous year’s gathering, the stock market experienced a decrease in response to Powell’s speech that leaned towards a more aggressive stance. During the forum, Powell used his platform to caution about potential challenges in the ongoing fight against inflation.
This year’s symposium centers around the theme of “structural shifts in the global economy.”
“As always, investors will carefully analyze comments from Powell and other participants to gain insights into the probable path ahead—particularly regarding the possibility of sustaining relatively higher interest rates for an extended duration, even if inflation shows signs of decreasing from its current levels,” remarked Zachary Hill, who holds the position of Head of Portfolio Strategy at Horizon Investments.
The analyst holds the viewpoint that any turbulence in the market triggered by Powell’s statements, scheduled to commence on Friday at 10:05 am ET, will only be temporary.
“We anticipate some fluctuations and repositioning during events like Jackson Hole, yet we see the recent market movements in stocks and bonds as a corrective phase rather than the initiation of a new pattern,” Hill expressed.
Additionally, the financial industry will also closely monitor consumer sentiment data for the month of August. Notably, there are no significant corporate earnings reports expected on Friday.
A Careful Start to the European Trading Session
Friday’s trading session in European markets began with limited activity.
The overall European Stoxx 600 index remained relatively stable at the beginning of the trading day. Within this index, technology stocks experienced a decline of 0.4%, whereas oil and gas shares saw an increase of 0.6%.
Shares of Meituan Dropped by Over 5%
On Friday, the shares of Meituan, a prominent Chinese food delivery company, experienced a decline of 5.21%. This decrease came after the company’s leadership cautioned about an anticipated deceleration in the volume of food deliveries during the third quarter.
Wang, speaking to analysts during the company’s second-quarter earnings call on Thursday, indicated, “We anticipate a slowdown in the third-quarter food delivery volume, although it is expected to remain more resilient compared to other sectors linked to consumer spending. We have faced some immediate challenges due to macroeconomic factors and exceptional weather conditions.”
Wang further elaborated that a “temporary reduction in food delivery transactions” might occur due to the potential emergence of pent-up consumer demand for offline consumption.
On Friday, Xiaolin Chen, who holds the position of Head of International at KraneShares, expressed the firm’s positive outlook for Meituan.
Chen stated, “Throughout the pandemic, the company effectively acquired a significant portion of the market. It successfully penetrated smaller cities. I am of the opinion that this acquired market share will remain consistently associated with the company.”
Nikkei Index Witnessed a Drop of Almost 2%
On Friday, Asia’s decline was spearheaded by Japan’s Nikkei 225, which experienced a 1.82% drop, marking a break in its four-day streak of gains.
Among the major contributors to this decline were technology and retail stocks, with notable prominence given to heavyweight Softbank Group, which incurred a significant loss of 3.79%.
Leading the pack of decliners on the index was industrial equipment manufacturer Advantest, suffering a substantial drop of up to 9.97%. Following closely was electronics and semiconductor firm Tokyo Electron, which faced a decline of 5.61%.
Tokyo Electron holds the second-highest weighting on the Nikkei, while Advantest is positioned as the fourth-largest contributor to the index.
Tokyo’s core inflation rate registered at 2.8%, down from July’s 3% and economists’ projected 2.9% for the Japanese capital.
Conclusion
Amidst market uncertainty, S&P 500 and Nasdaq clung to weekly gains, potentially ending a 3-week slump. Jackson Hole Economic Symposium’s focus on global shifts is anticipated. Investors analyze Powell’s speech impact. Consumer sentiment data and Meituan’s performance are closely monitored.
