US stocks end mixed ahead of key Fed speech

Traders John Panin (left) and Craig Esposito work on the floor of the New York Stock Exchange, Aug. 21, 2019.
Traders John Panin (left) and Craig Esposito work on the floor of the New York Stock Exchange, Aug. 21, 2019.PHOTO: AP

NEW YORK (AFP) - Wall Street stocks were mixed at the conclusion of a choppy session on Thursday (Aug 22) on lackluster economic data ahead of a key Federal Reserve address.

Stocks had opened higher, but tumbled around the same time as the US Treasury market experienced another yield "inversion" in which the return on 10-year notes fell below that of two-year notes, a worrisome development seen as sign of a possible recession.

Markets recovered somewhat, led by the Dow, which got a boost from Boeing, finishing the session at 26,252.24, up 0.2 per cent.

But the broad-based S&P 500 slipped 0.1 per cent to close at 2,922.95, while the tech-rich Nasdaq Composite Index shed 0.3 per cent to end the day 7,991.39.

Markets have been volatile throughout August amid concerns about worsening trade tensions, softening global growth and a weakening US manufacturing sector. Trading volumes also are low during the summer holiday season which contributes to bigger swings in prices.

Data from IHS Markit showed a US business activity index dropping from 52.6 in July to 50.9, barely above the 50 level that separates growth from contraction, after manufacturing activity slowed to the lowest since September 2009.

Gregori Volokhine, fund manager at Meeschaert Financial Services, said lackluster European data and the weight from the grinding US-China trade war are weighing on sentiment.

"There's a fear of a global slowdown and a sense that a 25- or 50-basis interest rate cut won't have much effect," Volokhine said, alluding to expectations that the US Federal Reserve will cut interest rates again next month.

Investors are awaiting a speech Friday by Fed chairman Jerome Powell at the annual central bank conference in Jackson Hole, Wyoming that some analysts expect will signal a likely interest rate cut next month.

But if his message is opaque - which it might be given the number of regional Fed officials voicing reticence to cut again so soon - markets could be in for a wild ride Friday.

Futures investors still overwhelmingly expect the Fed to cut interest rates in September, but 6.5 per cent now see no change, which is up from zero last week.

Among individual stocks, Boeing shot up 4.3 per cent as the company laid out a schedule to suppliers for gradually raising production on the 737 plane line to 57 in 2020 from 42 currently.

However, the company said the ramp-up is contingent on winning approval from regulators to return the 737 Max to the skies after two deadly crashes grounded the fleet earlier this year.