The US stock market took a slight step back on Thursday, giving up some recent gains as investors braced for key remarks from Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium later this week.
The broad-based S&P 500 dipped by 0.2%, retreating from its proximity to the all-time intraday high reached in July. The Dow Jones Industrial Average lost 32.8 points, or 0.1%, while the tech-heavy Nasdaq Composite shed 0.5%.
The market's focus has shifted towards Powell's anticipated speech on Friday, with traders hoping for further clarity on the Fed's future interest rate policy. Currently, markets are fully pricing in a reduction in borrowing costs next month, according to the CME Group's FedWatch tool. However, there's still uncertainty surrounding the magnitude of the rate cut.
This anticipation follows minutes from the Fed's July meeting, released on Wednesday, which indicated that most participants at the meeting deemed a reduction in the key interest rate at the September meeting "likely," contingent on data continuing to align with expectations.
Rising bond yields also exerted downward pressure on stocks on Thursday. The 10-year US Treasury yield climbed by around 8 basis points.
Despite the day's retreat, the three major indices are still on track to finish the week higher. The Nasdaq Composite and S&P 500 have each gained around 1%, while the Dow has risen by 0.5%.
"The market has already really priced in the Fed cutting rates," said Gina Bolvin, president of Bolvin Wealth Management. "That's why the market has rallied."
In company news, software firm Snowflake saw its share price drop by nearly 13% as rising costs impacted its operating margins. However, the company surpassed quarterly expectations and slightly raised its full-year product revenue forecast. Urban Outfitters shares slid by approximately 8% after disappointing second-quarter same-store sales growth.
Investors will be closely monitoring Powell's remarks at Jackson Hole for any hints about the future trajectory of monetary policy, which will likely have a significant impact on the direction of the stock market in the coming weeks.
