Cautious Trading: Investors Brace for Powell’s Speech and PCE Data

U.S. markets declined ahead of Powell’s speech and PCE data, with tech stocks mixed, the dollar surging, and crude prices sinking below $70.

U.S. financial markets experienced a broad pullback today, with major asset classes retreating as investors braced for upcoming economic data and remarks from Federal Reserve Chair Jerome Powell. The tech-heavy Nasdaq barely closed in the green, buoyed by strong performances from NVIDIA (NVDA) and Meta (META), while other major indices ended in the red, with small-cap stocks hit the hardest.

Investors appear to be treading cautiously ahead of Powell’s speech and the release of GDP data tomorrow, followed by the Personal Consumption Expenditures (PCE) report on Friday. These events are pivotal for gauging the Fed’s future policy direction.” Under the surface, markets seem to be leaning into a combination of traditionally defensive sectors and secular growth stories,” noted Goldman Sachs’ Chris Hussey. Sectors such as Utilities, Tech, Communication Services, and Staples offered some resistance to losses, but more procyclical sectors, such as Financials and Industrials, saw declines.

Yields on most U.S. Treasury durations rose, signaling a defensive stance from investors. The 2s10s yield curve steepened, reaching levels not seen since June 2022. This shift often indicates investor skepticism about near-term growth prospects and longer-term economic confidence.

“With little new information to trade on, it’s challenging to pinpoint exactly what’s driving today’s moves,” Hussey added.

Cautious Trading: Investors Brace for Powell’s Speech and PCE Data

While stocks like NVDA and META extended gains from earlier in the week, broader market performance was tepid. NVDA reached a key resistance level, briefly surpassing a $3 trillion market cap, with Google (GOOGL) and Amazon (AMZN) reclaiming their $2 trillion valuations.

Despite this, highly shorted stocks showed limited movement, reflecting a lack of momentum in that segment. VIX, a widely followed measure of volatility, ended the day higher, holding above 15, suggesting increased risk aversion.

The U.S. dollar surged today, reversing recent losses following China’s stimulus efforts. The Chinese yuan also pulled back, slipping further from the 7.00/USD level.

This strong dollar pressure weighed heavily on crude oil prices, with WTI falling below $70 per barrel, erasing gains seen earlier in the week. Even strong inventory draws could not support prices due to a rising dollar.

Gold, however, managed to eke out modest gains, reaching a new record high despite the dollar’s strength. This decoupling between gold and the dollar highlights the ongoing uncertainty in the global financial landscape, with some investors flocking to the safe-haven metal.


Cryptocurrencies were not spared from the day’s volatility, as Bitcoin spiked above $64,500 before sharply retreating to around $63,000. The rollercoaster ride underscores the heightened sensitivity in the market as traders react to macroeconomic data and fluctuating investor sentiment.

With Powell’s speech and key economic data looming, markets will remain volatile. Investors will closely monitor Powell’s tone for any hints on the Fed’s policy trajectory, particularly in light of the elevated U.S. sovereign risk, which remains high relative to recent months. As risk-off sentiment grows, market participants are poised for another potentially turbulent trading session.

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