Market Snapshot: Dow snaps longest losing streak in a month and stocks end modestly higher ahead of Jackson Hole summit

What drove markets?

Worries about a hawkish turn from the Federal Reserve have weighed on markets this week, although the three main benchmarks eked out gains Wednesday.

Since hitting a near four-month high on August 16, the S&P 500
SPX,
+0.29%
has swiftly retreated 4% as investors reassessed whether the Fed would soon pivot toward a slower pace of interest-rate hikes.

Comments late on Tuesday from Minneapolis Fed President Neel Kashkari reinforced the notion that the Fed plans to continue aggressively raising interest rates for the foreseeable future.

“When inflation is 8% or 9%, we run the risk of un-anchoring inflation expectations,” Kashkari said on Tuesday. “We definitely want to avoid allowing that situation to develop. So with inflation this high for me, I’m in the mode of wanting to err on making sure we’re getting inflation down and only relax when we see compelling evidence that inflation is well on its way back down to 2%.”

See: Financial markets are bracing for what could be a ‘very hawkish’ Jackson Hole speech by Fed’s Powell

After hearing from a bevy of senior Fed officials over the past month, investors are anxious to hear from Powell, said Paul Nolte, a portfolio manager at Kingsview Asset Management.

“Powell is the only one who we haven’t heard from since the July meeting. Powell is the most dovish on the board it seems and we all want to figure out what it is he’s looking at and how he’s thinking about things here,” Nolte said.

Fed Chair Powell is due to make a speech at 10 a.m. ET on Friday at the Jackson Hole symposium. Megan Horneman, chief investment officer at Verdence Capital Advisors, told MarketWatch that she isn’t expecting him to give any clear comments on the FOMC’s rate hike decision. She thinks more data is necessary before the September policy meeting for a clearer picture of what may be expected.

“How much more of a pivot to the aggressive side can he do in light of what we’re seeing from the economic standpoint?” Horneman said. “I think the market might be getting a little ahead of itself on the fact that he (Powell) may be super hawkish at this meeting. I don’t think he’s going to surprise us with anything different than what he’s given us.”

“Inflation is still a concern, but we may be seeing signs of it rolling over,” according to Horneman. “So a pivot to being significantly dovish — I do not see that happening, because of the fact that inflation is still too high. We need to see a consistent rollover in inflation, and you can’t say one month is a trend.”

See: Get used to aggressive rate hikes and stop counting on a ‘dovish’ Fed pivot, market pros warn

The shift in Fed policy expectations have pushed up benchmark borrowing costs and helped force the ICE Dollar Index
DXY,
+0.01%
to fresh 20-year highs, adding to the headwinds facing U.S. stocks.

U.S. economic data was relatively light Wednesday as investors digested flat durable-goods orders for July. Orders at U.S. factories for long-lasting goods fell flat in July due to a big drop in military contracts. Meanwhile, pending home sales fell in July by 1%, according to the monthly index released by the National Association of Realtors.

Related: Why Fed’s Powell speech on Friday likely matters less for stocks than a sputtering housing market

Which companies were in focus?

Shares of Peloton Interactive Inc.
PTON,
+20.36%
rocketed 20.4% higher after the company announced a deal to sell its products on Amazon. The fitness equipment and apparel company has relied on direct-to-consumer sales through its stores and website.

Nordstrom Inc.
JWN,
-19.96%
shares closed 19.9% lower after the company lowered its sales and profit guidance for the year. The retailer said its foot traffic dropped “significantly” in June, particularly in its discount Nordstrom Rack stores, and that its inventories need tweaking.

Shares of Urban Outfitters Inc.
URBN,
+1.88%
finished up by 1.9% after the company reported earnings after the bell on Tuesday. The company reported second-quarter net income of $59.5 million, or 64 cents a share, compared with 69 cents a share on revenue of $1.18 billion expected by analysts.

Shares of SoFi Technologies Inc.
SOFI,
+4.54%
jumped 4.5% after the Biden administration announced it would cancel $10,000 in debt for borrowers earning up to $125,000.

Bed Bath & Beyond Inc. 
BBBY,
+18.00%
shares popped 18% after Wall Street Journal reported the meme stock has found a financing source to shore up its liquidity.

How are other assets faring?

Oil futures
CL00,
+1.69%
climbed on Wednesday with West Texas Intermediate crude for October delivery 
CLV22,
+1.69%
 rose $1.05, or 1.1%, to close at $94.83 per barrel on the New York Mercantile Exchange. The Energy Information Administration on Wednesday reported that U.S. crude inventories fell by 3.3 million barrels for the week ended Aug. 19.

Treasury yields climb to the highest level since June. The 10-year Treasury yield
TMUBMUSD10Y,
3.108%
rose 5.2 basis points to 3.105%. The yield on the 2-year Treasury
TMUBMUSD02Y,
3.399%
climbed 5.1 basis points to 3.384%.

Gold futures 
GCZ22,
+0.22%
 for December delivery rose 30 cents, or less than 0.1%, to settle at $1,761.50 per ounce on Comex.

The U.S. dollar index 
DXY,
+0.01%,
 a gauge of the dollar’s strength against a basket of rivals,  remained near a two-decade high.

Bitcoin
BTCUSD,
-0.05%
rose 1.3% to $21,767.

In Europe, the STOXX Europe 600
SXXP,
+0.16%
ended 0.2% higher, while the FTSE 100
Z00,
-0.05%
finished 0.2% lower.

In Asia equities, Japan’s NIKKEI 225
NIK,
-0.49%
lost 0.5%, and Hong Kong’s Hang Seng
HSI,
-1.20%
shed 1.20%. China’s Shanghai Composite
SHCOMP,
-1.86%
fell 1.86%.

— Jamie Chisholm contributed to this article.

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