Gold Falls, Dollar Rises; Fed Speech and Geopolitical Tensions Await

Image Source : Krish Capital Pty Ltd

Yesterday’s Market Performance:  The S&P 500 slid 0.4% on Thursday, marking its fifth consecutive loss. The Dow Jones dropped 153 points, while the Nasdaq 100 fell 0.5%, pressured by tech stocks. Walmart shares declined 4.5% after missing earnings expectations despite raising its full-year sales outlook. Other retailers also weakened, raising concerns about consumer resilience amid tariffs and uneven spending. Jobless claims rose more than expected, while the S&P Global composite PMI showed the fastest business activity in three years.

Top Gainers and Losers Yesterday:  Walmart was the top loser, falling 4.5% on earnings disappointment. Other retailers dragged market sentiment down. Major tech stocks pressured the Nasdaq index. Specific top gainers were not emphasized.

Commodities Update:  Gold extended losses to around $3,330 an ounce, trading narrowly ahead of Fed Chair Powell’s speech. Investors awaited Fed signals on policy outlook. Fed officials showed little support for a rate cut despite inflation over target. Markets still price a 75% chance of a 25 basis point cut in September. WTI crude held above $63 per barrel, aiming for its first weekly gain in three weeks. Rising Russia-Ukraine tensions and US tariffs on Indian goods pressured oil. US crude inventories showed the largest draw since mid-June, supporting prices despite weak demand signs.

Futures Market:  The dollar index rose above 98.6, near a two-week high, as investors awaited Powell’s Jackson Hole speech. Rate futures price a 75% chance of a 25 basis point September cut, down from 90% last week. Fed officials urge caution—Kansas City Fed President calls the stance “modestly restrictive,” while Cleveland Fed President opposes rate cuts now.

Macro Update:  Economic data presented mixed signals. Jobless claims rose, suggesting softness in labor markets. However, the S&P Global PMI indicated strong business activity. Geopolitical risks persisted, with Russia-Ukraine conflict escalating through attacks. Investors focus on Powell’s speech for clues on policy direction and economic outlook globally.

Stocks saw early fluctuations on Thursday, but predominantly moved lower throughout the trading session. The S&P 500 decreased by 25.61 points, or 0.40%, closing at 6,370.18. From a technical standpoint, the index has been trending downward over the week, a trend we've been noting in our commentary. Nonetheless, today’s trading may present a relief rally as it marks the final trading day of the week. The 14-day RSI stays near the midpoint, suggesting a possible pause in the current selling momentum. Key support levels are around 6,277, while resistance is seen near 6,455.