Nasdaq Closes 1.8% Down, as Stocks Fall Fearing Hawkish Powell
Today we saw a bearish reversal in Nasdaq as buyers failed to break the 50 daily SMA, resulting in a 1.8% loss at the end of the day. Recently, the prevailing market trend has been a lower dollar and higher stocks, driven by the anticipation that the Federal Reserve (Fed) will soon begin cutting rates. However, this dynamic shifted dramatically today due to growing concerns over Fed Chair Jerome Powell’s expected hawkish speech at the Jackson Hole Symposium tomorrow.
The U.S. dollar strengthened at the start of the U.S. session, making a strong upward move before stabilizing, while the stock market’s decline persisted throughout the day. These movements were also supported by additional U.S. data indicating a sluggish economy.
Sentiment Impact on U.S. Stocks and Nasdaq
U.S. stocks opened the day on a positive note but quickly faced pressure as concerns arose ahead of Powell’s upcoming speech and rising Treasury yields. Boston Fed President Collins added to the uncertainty, stating at the Symposium that the timing for easing monetary policy seems appropriate, but emphasized a gradual, methodical approach. This could be interpreted as a signal that a 50 basis point cut may not be necessary. Additionally, big-cap tech stocks showed weakness, further weighing on the market.
Market Reactions and Powell’s Anticipated Speech
There’s also some nervousness surrounding Vice President Kamala Harris’ address tonight. Despite the S&P 500 technically having a bullish engulfing day, the Nasdaq led the decline, dropping by 1.8%. As the market declined further, some stop losses were triggered when earlier lows were breached. While there’s a lot of anxiety about Powell’s speech tomorrow, it seems that weaker market participants are being shaken out in advance.
Nasdaq Chart Daily – Buyers Failed at the 50 SMA
While many are concerned about what Powell might say regarding rates and inflation, my focus is on his assessment of the economy’s health. Powell has consistently remained optimistic about economic prospects over the years, so it’s unlikely that his speech will cause a significant market tremor. However, his insights on the economy will be closely watched.
Nasdaq Live Chart
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