Tracking Market Trends

TradingKey - On August 28, Eastern Time, the three major U.S. stock indexes closed lower across the board. Remarks by Federal Reserve Chairman Warsh at the Jackson Hole symposium signaled a hawkish stance, significantly raising market bets on a September rate hike and sending U.S. Treasury yields higher, which quickly cooled the AI rally driven by Nvidia's earnings the previous day. Although tech stocks still logged overall gains for the week, investors began refocusing on inflation and interest rate risks.

At the close, the Dow Jones Industrial Average fell 0.02% to 53,565.35; the S&P 500 Index dropped 0.25% to 7,711.76; and the Nasdaq Composite Index fell 0.52% to 26,402.42.

In terms of sectors and individual stocks, tech stocks were generally under pressure. Nvidia (NVDA) fell 4.57%, giving back some of its post-earnings gains; Intel (INTC) dropped 2.85%, and Marvell Technology (MRVL) tumbled 10.28% following its earnings release. By contrast, Workday (WDAY) gained 5.76% and Elastic (ESTC) surged 19.31%, as software stocks continued to display resilience.

In commodities, the re-escalation of the U.S.-Iran conflict over the weekend made crude oil the primary focus ahead of the Asian trading session. Following a U.S. military strike on Sunday against rocket launch facilities on Iran's Larak Island, Brent crude rose over 2.5% at today's open, climbing above $90; WTI crude (USOIL) also gained more than 2%, peaking near $85. The Strait of Hormuz is a vital global energy transit route, and the escalating military conflict has heightened supply disruption risks once again.

In gold, spot gold (XAUUSD) briefly fell near $4,445 on Friday. After Warsh delivered hawkish signals, the U.S. dollar and Treasury yields strengthened, putting pressure on gold prices. In the crypto market, Bitcoin fluctuated around $78,000, with risk assets overall affected by shifting interest rate expectations.

Market News

The US-Iran conflict escalated again over the weekend. The US military stated that US forces struck two rocket launch facilities on Iran's Larak Island, claiming they were preparing to deploy sea mines into the Strait of Hormuz. Iran subsequently fired missiles at a US military base in Jordan, but they were intercepted. This exchange of fire marks the first direct military clash between the two sides in more than a month, renewing market concerns over shipping through the Strait of Hormuz and global energy supplies.

Warsh delivered hawkish signals at Jackson Hole, boosting expectations for a September rate hike. Federal Reserve Chairman Warsh stated that without sufficient evidence proving that inflation is clearly and rapidly returning to the 2% target, the Fed still needs to continue taking action. Following the speech, market bets on a September rate hike rose from about 35% previously to around 57%, while the 2-year US Treasury yield climbed to around 4.35%. The hawkish shift in interest rate expectations became a key factor weighing on tech stocks and gold.

This week's US August nonfarm payrolls report stands as the market's biggest macroeconomic event. As expectations for the Fed's September policy shift, the US August nonfarm payrolls report due this Friday will be the central focus for markets. The market currently expects nonfarm payrolls to increase by about 58,000 in August, with the unemployment rate projected to remain at 4.1%. If the employment data is significantly stronger than expected, it may further reduce the likelihood of a rate cut; if employment weakens noticeably, it could prompt markets to bet on policy easing once again.

Broadcom (AVGO), Dell (DELL), and Hewlett Packard Enterprise (HPE) are set to report earnings this week. Nvidia's earnings have already validated that AI infrastructure demand remains robust, and the market will next turn its attention to the results from Broadcom, Dell Technologies, and Hewlett Packard Enterprise. Broadcom is drawing particular scrutiny, as its AI-related business growth, custom chip orders, and forward guidance will serve as critical indicators of whether the AI infrastructure investment cycle can endure.

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