Volatility enveloped Wall Street due to rising concerns over geopolitical tensions in the Middle East and investors scrutinizing Jerome Powell’s comments for policy direction. The ongoing Middle East conflict, marked by increased drone attacks in Iraq and Syria and intercepted missiles and drones aimed at Israel, cast a shadow on the markets. Amidst this, the S&P 500 registered its third consecutive loss, and Tesla Inc. saw a steep drop of over 9% after subpar results.
Jerome Powell, the Federal Reserve Chair, indicated a cautious approach to rate hikes. This came as the Treasury 10-year yields neared 5%. The Federal Reserve's cautious stance, interpreted from Powell's remarks, led to market predictions trimming the likelihood of another rate increment to slightly under 50%. Notably, experts like Peter Boockvar emphasized the Federal Reserve's challenges in managing long rates, while Jeffrey Roach from LPL Financial highlighted the uncertainty surrounding inflation in upcoming quarters.
On the economic front, US unemployment benefit applications plummeted to their lowest since January, signaling a robust labor market. Conversely, sales of pre-owned US homes declined, marking their lowest point since 2010 due to worsening affordability. In international markets, an "incident" led to trading disruptions on the London Stock Exchange.
Corporate performances showcased mixed results. Netflix (NFLX) witnessed a surge following its impressive quarterly subscriber growth, while companies like AT&T (T) and Union Pacific (UNP). reported profits surpassing expectations. However, firms like Blackstone (BX) faced challenges, with a 12% quarterly profit reduction, and Lam Research (LRCX) saw a decline in revenue for the third consecutive quarter.
