“The Fed chairman’s important job now is to not give any false hopes to the market while managing expectations with a fine line,” Aslam said.

Loading

Overnight on Wall Street, S&P 500 Index tumbled 0.9 per cent, bringing to an end its recent rally. The Dow Jones Industrial Average dipped 0.4 per cent and the technology heavy Nasdaq Composite Index sank 1.7 per cent.

Stocks fell as Treasury yields cranked up the pressure on the bond market following some mixed data on the US economy, which has been slowing under the weight of high interest rates meant to get inflation under control.

One report showed slightly more US workers applied for unemployment benefits last week than expected. The number is still low relative to history, but the uptick could signal a job market that continues to cool.

A second report, suggested US business activity remains deeply split. Growth for services businesses is accelerating, according to preliminary data from S&P Global Market Intelligence. But the country’s manufacturing sector appears to be contracting at a more severe rate.

Overall, the data suggested the US economy is still growing but pointed to some fragility.

“Growth has become increasingly dependent on the service sector as manufacturing, which often leads the economic cycle, has fallen into decline,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

The Fed has pulled its main interest rate to the highest level in more than two decades in hopes of restraining the economy enough to stifle inflation but not so much that it causes a recession. With inflation slowing, the wide expectation is for the Federal Reserve to cut interest rates at its next meeting in September, which would be the first easing since the COVID-19 crash of 2020.

One danger is if expectations for coming cuts have gone overboard among investors. That could make the drop in Treasury yields since the spring overdone.

In the meantime, US companies continue to report mostly better-than-expected profits.

Shares in internet-connected exercise company Peloton soared 35.4 per cent after it topped sales forecasts and lost less money in the latest quarter than analysts were expecting.

Zoom Video Communications also climbed 13 per cent after delivering better results and revenue for the latest quarter than forecast.

However, more stocks fell than rose, including Nvidia, which was the heaviest single weight on the S&P 500. It erased an early gain to fall 3.7 per cent ahead of its highly anticipated profit report coming next week.

With AP