Interest Rate Uncertainty May Lead To Continued Weakness On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to initial weakness on Wall Street on Thursday, with stocks likely to see further downside after ending the previous session off their worst levels but still mostly lower.

Lingering uncertainty about the outlook for interest rates may weigh on the markets ahead of Federal Reserve Chair Jerome Powell's highly anticipated speech at the Jackson Hole Economic Symposium on Friday.

Powell's remarks could have a significant impact on the outlook for rates ahead of the Fed's next monetary policy meeting in September.

"Powell is likely to keep his cards close to his vest, emphasize that the Fed cares very much about their dual mandate and explain that they are data dependent and will need to see the jobs report (9/5) and the two inflation reports (9/10-9/11) before they can make a determination whether or not to cut interest rates on September 17th," said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

Ahead of Powell's speech, CME Group's FedWatch Tool is currently indicating a 79.1 percent chance the Fed will lower rates by a quarter point next month.

However, in an interview with CNBC, Kansas City Fed President Jeffrey Schmid expressed doubt about lowering interest rates in September, saying the central bank needs to "have very definitive data to be moving that policy rate."

"In September, we'll get around tables and we'll collaborate and we'll figure it out, but yeah, I think there's a lot to be said between now and September," he added.

A notable decrease by shares of Walmart (WMT) may also generate negative sentiment, with the retail giant tumbling by 3.3 percent in pre-market trading after reporting weaker than expected second quarter earnings.

After moving sharply higher early in the session, stocks regained ground over the course of the trading day on Wednesday. The major averages climbed well off their worst levels of the day, although the Nasdaq and the S&P 500 remained in negative territory.

The tech-heavy Nasdaq ended the day down 142.10 points or 0.7 percent at 21,172.86 after plunging by as much as 1.9 percent in early trading. The S&P 500 also dipped 15.59 points or 0.2 percent to 6,395.78, while the Dow inched up 16.04 points or less than a tenth of a percent to 44,938.31.

The early weakness on Wall Street largely reflected an extended sell-off by technology stocks, which led the markets lower during Tuesday's session.

Tech stocks moved lower following a report from Reuters indicating the Trump administration is looking into the federal government taking equity stakes in computer chip manufacturers that receive CHIPS Act funding to build factories in the country.

White House Press Secretary Karoline Leavitt had confirmed on Tuesday that Commerce Secretary Howard Lutnick was working on a deal to take a 10 percent stake in Intel (INTC).

"A positive spin on proceedings is that the stake taken by the US government may crowd in other investors and give them confidence to buy in," said Danni Hewson, head of financial analysis at AJ Bell.

He added, "Meanwhile the government taking partial ownership of a company in exchange for grants which were already offered might well send shivers down the spine of other businesses which rely on the largesse of the US state."

Selling pressure waned over the course of the session, however, leading some traders to pick up stocks at relatively reduced levels.

Airline stocks still showed a substantial move to the downside on the day, dragging the NYSE Arca Airline Index down by 2.3 percent.

Significant weakness was also visible among housing stocks, as reflected by the 2.3 percent slump by the Philadelphia Housing Sector Index.

Computer hardware and steel stocks also saw notable to the downside, while gold stocks moved sharply higher amid a rebound by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are rising $0.26 to $62.97 a barrel after surging $0.94 to $62.71 a barrel on Wednesday. Meanwhile, after jumping $29.80 to $3,388.50 an ounce in the previous session, gold futures are slipping $4.90 to $3,383.60 an ounce.

On the currency front, the U.S. dollar is trading at 147.69 yen versus the 147.33 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1649 compared to yesterday's $1.1652.

Asia

Asian stocks ended mixed on Thursday as investors awaited policy signals from Federal Reserve Chair Jerome Powell, who is scheduled to speak on Friday at the Fed's annual conference in Jackson Hole, Wyoming.

China's Shanghai Composite Index inched up by 0.1 percent to 3,771.10, hitting a new 10-year high amid easing trade tensions and fresh government moves to stabilize jobs and spending.

Hong Kong's Hang Seng Index dipped 0.2 percent to 25,104.61 on disappointing corporate earnings and cellphone shipment reports. Baidu fell 2.6 percent after its second quarter revenue missed expectations.

Japanese markets ended lower for a third straight session as technology stocks tracked their U.S. peers lower. The Nikkei 225 Index slid 0.7 percent to 42,610.17, while the broader Topix Index settled 0.5 percent lower at 3,082.95.

SoftBank lost 2 percent and Tokyo Electron shed 2.4 percent. Drug maker Daiichi Sankyo plunged 7.2 percent to become the worst performer among the 225 stocks on the Nikkei.

Seoul stocks eked out modest gains, with defense and shipbuilding stocks leading the surge on expectations of rising global arms demand.

The Kospi rose 0.4 percent to 3,141.74, snapping a three-day losing streaking and rebounding from a six-week low hit the previous day.

Nuclear power plant builder Doosan Enerbility soared 7.1 percent and shipbuilder HD Hyundai Heavy Industries surged 4.8 percent.

Australian markets rallied to a fresh record high, helped by a wave of earnings beats from the likes of Transurban, Super Retail, Brambles and Downer EDI.

The benchmark S&P/ASX 200 Index jumped 1.1 percent to 9,019.10, surpassing 9,000 points for the first time in a broad-based rally.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index advanced 0.9 percent to 13,194.07, making its highest close since the end of December following the RBNZ rate-cut decision.

Europe

European stocks have moved mostly lower on Thursday as investors look ahead to Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium for hints of possible rate cuts this year.

In economic news, the Eurozone manufacturing PMI unexpectedly returned to expansion in August, while the services sector activity declined, according to data from the HCOB's latest Purchasing Managers' Index (PMI) Survey.

Elsewhere, the U.K.'s private sector expanded at the strongest pace in 12 months while the country's budget deficit narrowed in July to the lowest level for the month in three years, separate reports revealed.

The French CAC 40 Index is down by 0.6 percent, the German DAX Index is down by 0.3 percent and the U.K.'s FTSE 100 Index is down by 0.2 percent.

Paris-based ophthalmology company Nicox soared 10 percent after announcing positive results from the NCX 470 phase 3 Denali trial in glaucoma patients.

Amsterdam-listed insurer Aegon jumped 7 percent. The company swung to a €606 million net profit in the first half of 2025 from a €65 million loss a year.

WHSmith shares slumped 37 percent. The U.K. retailer cut its financial forecasts and launched an independent review after discovering "an overstatement" in profits at its U.S. arm.

Renishaw surged 9 percent. The engineering firm announced that its Group Finance Director Allen Roberts will step down at the end of the year, ending a 46-year career at the company.

Global recruitment chain Hays lost 4 percent after reporting a plunge in annual profit.

Norway's second biggest oil & gas company Aker BP rallied 3 percent after announcing a significant oil discovery in the Yggdrasil area in the Norwegian North Sea.

U.S. Economic News

First-time claims for U.S. unemployment benefits rose by much more than expected in the week ended August 16th, according to a repot released by the Labor Department on Thursday.

The report said initial jobless claims climbed to 235,000, an increase of 11,000 from the previous week's unrevised level of 224,000. Economists had expected jobless claims to inch up to 225,000.

The Labor Department said the less volatile four-week moving average also edged up to 226,250, an increase of 4,500 from the previous week's unrevised average of 221,750.

Manufacturing activity in the Philadelphia area has weakened in the month of August, the Federal Reserve Bank of Philadelphia revealed in a report released on Thursday.

The Philly Fed said its diffusion index for current general activity tumbled to a negative 0.3 in August from a positive 15.9 in July, with a negative reading indicating contraction. Economists had expected the index to decrease to a positive 7.0.

Meanwhile, the report said firms continue to expect growth over the next six months, as the diffusion index for future general activity climbed to 25.0 in August from 21.5 in July.

At 10 am ET, the National Association of Realtors is scheduled to release its report on existing home sales in the month of July. Existing home sales are expected to slip to an annual rate of 3.90 million in July after tumbling to a rate of 3.93 million in June.

The Conference Board is also due to release its report on leading economic indicators in the month of July at 10 am ET. The leading economic index is expected to edge down by 0.1 percent in July after falling by 0.3 percent in June.

At 11 am ET, the Treasury Department is scheduled to announce the details of this month's auctions of two-year, five-year and seven-year notes.