THE STREET HOLDS ITS BREATH ON J POWELL. BUT THE CHARTS SAY WE’RE GOING LOWER REGARDLESS

After failing to sustain an initial move to the upside, stocks moved sharply lower over the course of the trading session on Thursday. The major averages all showed significant moves to the downside, with the tech-heavy Nasdaq leading the pullback.

The major averages finished the day just off their lows of the session. The Nasdaq plunged 257.06 points or 1.9 percent to 13,463.97, the S&P 500 tumbled 59.70 points or 1.4 percent to 4,376.31 and the Dow clumped 373.56 points or 1.1 percent to 34,099.42.

The initial strength on Wall Street partly reflected a positive reaction to earnings news from chipmaker Nvidia (NVDA).

Nvidia reported fiscal second quarter results that far exceeded analyst estimates and provided upbeat guidance amid optimism about demand for AI chips.

Buying interest waned shortly after the start of trading, however, with concerns about the outlook for interest rates continuing to weigh on the markets ahead of the economic symposium in Jackson Hole, Wyoming.

The symposium will feature meetings by global central bank leaders as well as a speech by Federal Reserve Chair Jerome Powell on Friday that could impact the outlook for interest rates.

“The tech sector often demands confidence without really having anything to foster it, but AI does indeed seem to have heralded a new and exciting era of computing, particularly now people can actually see those advances first hand and understand how they could further infiltrate our lives,” said Danni Hewson, head of financial analysis at AJ Bell.

She added, “But there’s always something that comes along to cut that confidence off at the knees and no one will be surprised the knife used today was wielded by the now familiar spectre of rate hike worries, with a touch of profit taking on the side.

On the U.S. economic front, the Commerce Department released a report showing new orders for U.S. manufactured durable goods tumbled by more than expected in the month of July.

The Commerce Department said durable goods orders plunged by 5.2 percent in July after surging by a revised 4.4 percent in June.

Economists had expected durable goods orders to slump by 4.0 percent compared to the 4.6 percent jump that had been reported for the previous month.

Excluding a pullback in orders for transportation equipment, durable goods orders rose by 0.5 percent in July after inching up by 0.2 percent in June. Ex-transportation orders were expected to edge up by 0.2 percent.

Meanwhile, the Labor Department released a report unexpectedly showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended August 19th.

The report said initial jobless claims slipped to 230,000, a decrease of 10,000 from the previous week’s revised level of 240,000.

Economists had expected jobless claims to inch up to 240,000 from the 239,000 originally reported for the previous week.

Sector News

Semiconductor stocks pulled back sharply despite the upbeat earnings news from Nvidia, dragging the Philadelphia Semiconductor Index down by 3.4 percent.

Substantial weakness also emerged among airline stocks, as reflected by the 2.9 percent nosedive by the NYSE Arca Airline Index.

Networking, computer hardware and software stocks also came under considerable selling pressure, weighing on the tech-heavy Nasdaq.

Most of the other major sectors also moved to the downside, giving back ground after moving mostly higher during Wednesday’s session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while Hong Kong’s Hang Seng Index spiked by 2.1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index edged up by 0.2 percent, the French CAC 40 Index fell by 0.4 percent and the German DAX Index slid by 0.7 percent.

In the bond market, treasuries moved moderately lower after showing a lack of direction in early trading. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.7 basis points to 4.235 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to Fed Chair Powell’s speech and its impact on the outlook for interest rates.

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