Wall St muted with focus on Fed rate path

Wall Street’s main indexes are subdued in early trading as recent economic data added to worries of a slowdown ahead of the US Federal Reserve’s conference at Jackson Hole this week.

The US indexes posted losses in the past three sessions after a northern hemisphere summer rally was halted by growing concerns of a hawkish stance by the Fed, an energy crisis in Europe and signs of economic slowdown in China.

Data on Tuesday showed private-sector business activity in the United States contracted for a second straight month in August to its weakest in 27 months, with particular softness in the services sector as demand weakened.

“Traders are reluctant to raise their exposure, afraid of getting run over by a more forceful Fed,” Marios Hadjikyriacos, senior investment analyst at XM, said.

Investor focus will be on the Jackson Hole symposium which begins on Thursday and remarks from Fed Chair Jerome Powell the day after for clues on whether the US central bank can achieve a “soft landing”.

“Some anticipation over how hawkish Powell could be on Friday has added to some of the lingering concerns that we’ve seen recently,” said Ryan Detrick, chief market strategist at Carson Group.

Traders are split between expecting a 50-basis point hike and a 75-basis point hike by the central bank.

Markets had bounced back from bear market lows on better than expected results from US corporations and data suggesting that inflation may have peaked but fears of an aggressive Fed snapped the summer rally last week.

The S&P 500 has recovered 13 per cent from its mid-June lows.

The benchmark index will end the year a little above its current level, according to a Reuters poll.

Meanwhile, surveys on Tuesday showed the global economy is increasingly at risk of sliding into recession as consumers faced with generation-high inflation rein in spending while central banks are tightening policy aggressively.

Six of the 11 major S&P 500 sectors advanced in early trading, with energy stocks leading gains.

Oil majors Exxon Mobil Corp and Chevron Corp rose more than 0.4 per cent each, tracking crude prices, after Saudi Arabia suggested this week that OPEC could consider cutting output.

The benchmark 10-year Treasury yield extended gains for its fourth straight session, weighing on megacap growth and technology stocks.

Banks slipped 0.4 per cent, on track to extend losses for the sixth straight session.

In early trading, the Dow Jones Industrial Average was up 7.94 points, or 0.02 per cent, at 32,917.53, the S&P 500 was up 0.35 points, or 0.01 per cent, at 4,129.08, and the Nasdaq Composite was up 2.50 points, or 0.02 per cent, at 12,383.80.

Intuit Inc gained 6.1 per cent after the accounting software maker forecast upbeat fiscal 2023 revenue.

Nordstrom Inc tumbled 17.6 per cent after the retailer cut its annual revenue and profit forecasts, a sign that inflation was squeezing consumer spending on its high-end clothing and footwear.

Advancing issues outnumbered decliners for a 1.41-to-1 ratio on the NYSE and a 1.07-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 30 new lows while the Nasdaq recorded 20 new highs and 53 new lows.