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Anticipation of Powell's Speech Leads to Wall St Drop

U.S. stocks waver as investors eagerly await Federal Reserve Chair Jerome Powell's address.

Jerome Powell
Jerome Powell

Nasdaq Takes a Hit After Recent Gains

U.S. stocks were on a decline during Thursday afternoon trading. The Nasdaq, following its notable gains earlier in the week, saw a decrease of about 1%. Investors are showcasing signs of apprehension in the lead-up to Federal Reserve Chair Jerome Powell's much-anticipated speech scheduled for Friday.

Nvidia Surges Amid AI Chip Demand

In contrast to the general market sentiment, Nvidia's (NASDAQ: NVDA) stocks saw a rise of over 3%, even setting a record high during the day's session. This surge comes in the aftermath of the company's announcement on Wednesday evening, where they projected a much stronger-than-anticipated forecast due to the increased demand for their artificial intelligence chips.

S&P 500 Sectors Show Downtrend

Despite Nvidia's success, all major sectors of the S&P 500 observed a decline, including the technology sector. Furthermore, an index dedicated to semiconductors experienced a drop of more than 2%.

Powell's Upcoming Speech Fuels Market Speculations

The market's focus seems to be on the Federal Reserve, especially with Powell's upcoming speech at the annual central bank summit in Jackson Hole. Jake Dollarhide, the CEO of Longbow Asset Management in Tulsa, Oklahoma, remarked, "Even though investors are keen on Nvidia and technology, the market is primarily concerned about the Fed's next move."

Snapshot of Key Market Movements

Ahead of Nvidia's announcement, the market was in positive territory, riding on the hopes that the news might bolster this year's AI tech rally. However, significant drops were observed across major indexes: The Dow Jones Industrial Average decreased by 263.24 points, the S&P 500 fell by 37.44 points, and the Nasdaq Composite plunged by 156.94 points.

Economic Data & Investor Sentiment

Earlier data showcasing claims for U.S. unemployment benefits reflected a robust jobs market, a scenario that many believe could align with the Fed's hawkish stance on maintaining higher interest rates. Concurrently, Treasury yields have seen an uptick. Philadelphia Fed President Patrick Harker also shed light on the topic, mentioning that interest rates might need to be restrictive for some time.

Retail Market Faces Challenges

Dollar Tree's (NASDAQ: DLTR) stocks faced a decline of 11.9% post their annual profit forecast, which was significantly lower than expectations.

Declining stocks dominated the NYSE with a 2.61-to-1 ratio over advancing ones. Similarly, on the Nasdaq, a 2.75-to-1 ratio was in favor of decliners. The S&P 500 noted 10 new 52-week highs and 13 new lows, while the Nasdaq Composite listed 32 new highs and a staggering 195 new lows.