Stocks bounced back from session lows after a week-long selloff in the tech sector, which was the latest sign of frantic trading on Wall Street ahead of Jerome Powell's speech at Jackson Hole.
After a crash that saw the value of American stocks fall by billions of dollars, buyers emerged in the final stage of trading on Wall Street. The resumption of the decline in major tech companies and signs that inflation remains a primary concern for Federal Reserve representatives were reflected in the trades on Wednesday.
However, the S&P 500 index ended up down only 0.2%, with most major groups of companies rising. All large-cap companies fell but also reduced losses. The Nasdaq 100 closed down 0.6% after nearly a 2% decline earlier.
Oaktree Capital Management LP co-founder Howard Marks warned that American stocks are at "early stages" of forming a bubble, although the critical point for a correction has yet to arrive.
«Today seems to be a test for buyers on the decline, as the PMI business activity index data on Thursday and Federal Reserve Chairman Jerome Powell's speech at Jackson Hole could be a market moving force and a factor changing the situation,» wrote Andrew Tyler of JPMorgan Chase & Co. earlier on Wednesday.
Treasury bonds rose slightly as traders ignored inflation risks voiced by Fed officials in the latest meeting minutes. Swaps indicated that traders continue to price in a high probability of rate cuts in September.
According to Chris Zaccarelli of Northlight Asset Management, Powell is unlikely to reveal his cards and will emphasize that the Fed cares deeply about its dual mandate, explaining that they are data dependent.
“The minutes reflect Powell's aggressive statements made at the last meeting,” said David Russell of TradeStation. “At Jackson Hole, this could splash cold water in the faces of these 'bulls'.”
Marco Kaziragi of Evercore says that the latest Fed minutes are "somewhat outdated," given the economic events that have occurred since then, particularly the weaker-than-expected employment report for July.
However, nearly all participants agreed that the Fed "has all the means to respond timely to potential economic events," he noted.
“These considerations reinforce our view that the Fed will cut rates in September unless there is a renewed tightening in the labor market combined with negative inflation news,” Kaziragi noted.