Volatility on the horizon

US stock markets closed lower on Thursday as investors turned cautious ahead of a crucial speech by Federal Reserve Chair Jerome Powell. His remarks at the Jackson Hole Economic Symposium are expected to shape market sentiment in the coming weeks.

Fed signals and investor expectations

All eyes are on Powell's Friday speech at 10 a.m. Eastern Time. Traders are looking for hints on whether the Fed could cut interest rates as early as September, following recent signs of labor market weakness.

According to LSEG data, the probability of a 25-basis-point rate cut in September dropped to 79 percent, compared to nearly 100 percent just a week earlier.

Low-volume season

Thin August trading volumes make markets more sensitive to Powell's comments. On Thursday, trading activity on US exchanges reached about 12.3 billion shares, compared with an average of 17.1 billion over the past 20 sessions.

Cautious stance from Fed officials

Regional Federal Reserve leaders, including Beth Hammack from Cleveland, Raphael Bostic from Atlanta, and Jeffrey Schmid from Kansas City, stressed the importance of relying on hard data rather than forecasts.

Pressure from corporate earnings

Market sentiment was further dampened by Walmart's quarterly results. The retail giant reported figures that fell short of expectations, adding to the downward pressure on indices.

Market results

• Dow Jones Industrial Average: down 152.81 points, a 0.34 percent drop, to 44,785.50;
• S&P 500: down 25.61 points, a 0.40 percent decline, to 6,370.17;
• Nasdaq Composite: down 72.54 points, a 0.34 percent fall, to 21,100.31.

Business activity picks up

August data revealed an unexpected acceleration in US business activity, complicating the Federal Reserve's decision-making ahead of its September policy meeting. Another report showed that sales of previously owned homes rose in July, adding to the case for a cautious stance from the central bank.

Pressure on equities

Following the reports, yields on US Treasury bonds climbed, putting additional pressure on stocks. Nine of the eleven S&P 500 sectors closed in the red, with the consumer goods sector down 1.18 percent.

Walmart disappoints Wall Street

Retail giant Walmart posted higher annual revenue and profit on the back of strong demand across income groups. Still, quarterly earnings fell short of expectations, while tariff-related costs grew. Shares of the company dropped 4.5 percent.

Retailers in the spotlight

Earnings updates from other major chains, including Target and Home Depot, also took center stage this week, as investors weighed the impact of US tariffs on consumer spending.

Tech stocks remain weak

The sell-off in technology shares, which began earlier in the week, appeared to lose some momentum, but Nvidia, Meta, Amazon, and AMD all continued to trade lower.

Valuation concerns rise

The decline highlighted investor unease over potentially overstretched valuations in the tech sector, which has surged since April lows. Growing government scrutiny of technology companies added another layer of concern.

Coty stock plunges

One of the most notable market moves came from beauty products maker Coty, whose shares tumbled more than 21 percent. The drop followed the company's warning that quarterly sales are likely to decline amid weakening consumer spending in the US.

European markets under pressure

On Friday, European equities opened lower as traders waited for a pivotal speech by Federal Reserve Chair Jerome Powell, hoping for guidance on the central bank's future course.

The pan-European STOXX 600 slipped 0.1 percent by 07:02 GMT but still secured a third consecutive weekly gain. Regional dynamics were mixed, with Germany's DAX index edging down 0.2 percent.

German economy contracts

Fresh figures from the federal statistics office showed that Germany's GDP shrank by 0.3 percent in the second quarter of 2025, a deeper contraction than forecast. Industrial production was particularly weak, adding to concerns over the country's economic momentum.

Spotlight on Jackson Hole

Markets are now focused on Powell's address at the annual Jackson Hole symposium. Recent remarks by Fed officials have heightened speculation about the direction of US monetary policy heading into September.

EU pushes back on US tariffs

The European Union renewed its calls for lower US tariffs in certain industries after trade talks hit a deadlock. Brussels signaled it would continue pressing for reduced duties on car exports, retroactive to August 1, while maintaining preferential treatment for European wine and spirits.

AkzoNobel shares surge

Paints and coatings producer AkzoNobel saw its stock rise 4.3 percent after activist investor Cevian Capital disclosed a 3 percent stake in the company. The information was confirmed in a filing with Dutch regulator AFM.