Of the main U.S. equity indexes, only the Dow Jones Industrial Average managed to post green numbers Wednesday, and that was briefly at the open, for a while around midday, then shortly before the close.
Investors, traders and speculators continue to discount important earnings reports, but they’re also watching the White House, the Federal Reserve, and what’s happening with interest rates – now and for the long term.
President Donald Trump’s effort to reshape the most important central bank in the world to his liking expanded today when he called on Federal Reserve Governor Lisa Cook to resign.
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In a letter to Attorney General Pam Bondi, Federal Housing Finance Agency Director William Pulte alleged Cook “falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud.”
“Cook must resign, now!!!” President Trump posted on Truth Social. Neither the Fed nor the Justice Department has commented on either Pulte’s allegations or Trump’s post.
The U.S. Dollar Index (DXY), already down 9.4% from December 31 through August 19 and under renewed pressure amid Trump’s campaign against the Fed, slipped to 98.09 before closing down fractionally at 98.22 vs 108.49 at the start of the year.
The 10-year U.S. Treasury yield – a broad proxy for sentiment as well as a key benchmark for multiple market interest rates such as corporate bonds and home loans – ticked down as low as 4.275% and closed at 4.289% vs 4.302% as of Tuesday.
At the closing bell, the blue-chip Dow Jones Industrial Average was up 16 points to 44,938, the broad-based S&P 500 had slipped 0.2% to 6,395, and the tech-heavy Nasdaq Composite was down 0.7% to 21,172.
More Fed questions
It was a big deal when more than one member dissented from the vote last month to hold interest rates steady. But that’s only because it hadn’t happened in 32 years. Indeed, the FOMC minutes from the July meeting released today are as mundane as ever – a little bit of light, a little bit of heat, nothing to measure up to the sound and fury about a split inside the Eccles Building.
“Participants generally pointed to risks to both sides of the Committee’s dual mandate,” read the July minutes, “emphasizing upside risk to inflation and downside risk to employment.”
And “a majority of participants judged the upside risk to inflation as the greater of these two risks” but two considered “downside risk to employment the more salient risk.”
In fact, the Fed chair’s stated position as of his press conference following the July FOMC meeting does not differ much from the dissenters’. When it voted to hold interest rates in July, the Fed said economic growth had moderated but made few other changes to its monetary policy statement. During his post-meeting press conference, Powell spoke too about softer growth.
He said the labor market was still solid – but he also cited “downside risks” six times, according to Goldman Sachs Chief Economist Jan Hatzius. And he said inflation is most of the way back to 2%, endorsing a “reasonable base case” that tariffs will indeed have a one-time impact on prices.
More Fed speak
Chair Powell will make his last appearance in his official capacity at the Jackson Hole Economic Symposium, which begins Thursday and ends Saturday. Powell’s term as Fed chair will end in May 2026. Serendipitously in the aftermath of a soft July jobs report, the theme of the symposium is “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.”
Powell will deliver the keynote address Friday at 10 am ET, speaking on the “Economic Outlook and Framework Review.”
As Senior Global Market Strategist Scott Wren of the Wells Fargo Investment Institute notes, “Historically, the Federal Reserve (Fed) Chair’s speech at the annual Jackson Hole Symposium has been used to hint at policy changes to come, with action taking place at the September meeting.”
Fed Governor Christopher Waller – one possible answer to the question who will replace Jerome Powell as Fed chair? – delivered remarks on “Technological Advancements in Payments” at the Wyoming Blockchain Symposium.
Fed Vice Chair for Supervision Michelle Bowman, also on the Fed chair hot list, spoke to the symposium Tuesday about “Embracing Innovation.” Waller and Bowman dissented from the decision to hold interest rates at the July FOMC meeting.
Explaining his dissent earlier this month, Waller described tariffs as “one-off increases in the price level” that “do not cause inflation beyond a temporary increase.” He added that monetary policy should be “close to neutral, not restrictive.” Waller noted too that incoming economic data indicate “downside risks to the labor market have increased.”
In remarks prepared for delivery at the blockchain symposium, Waller emphasized the importance of cooperation between the private sector and the central bank when it comes to issues such as decentralized finance and the traditional payments system.
Waller did not comment on monetary policy today in Wyoming.
Target is off
Earnings of $2.05 per share were a penny better than the Wall Street estimate. And management reiterated guidance for a full-year low-single-digit sales decline and EPS of $7 to $9 vs Wall Street forecasts of 1.5% top-line erosion and EPS of $7.28.
Meanwhile, Target also said Chief Operating Officer Michael Fiddelke will succeed CEO Brian Cornell on February 1, 2026. Cornell will become executive chair of the TGT board.
“While we have not met Mr. Fiddelke,” writes Mizhuho analyst David Bellinger, “his background is impressive as a 20-plus year company veteran. His ‘fresh eyes’ perspective could bring material change to the business.”
Bellinger’s qualification is reflected in TGT’s post-announcement price action: “However, we and the investment community preferred an external candidate to bring wholesale change to Target.”
Walmart (WMT, +1.3%), the world’s biggest retailer and an important bellwether for consumer health as well as the impact of Trump’s tariffs, is set to report earnings before Thursday’s opening bell.
Big tech earnings
Nvidia (NVDA, -0.1%), Microsoft (MSFT, -0.8%), Apple (AAPL, -2.0%) and Amazon.com (AMZN, -1.8%) were among the worst Dow Jones stocks today, “leading” tech stocks and related sectors such as consumer discretionary and communication services and the broader market into the red for a second straight trading session.
The next and perhaps most important phase of earnings season is next week, with Nvidia set to report its fiscal 2026 second-quarter results after the closing bell Wednesday, August 27.
According to Treasury Partners Chief Investment Officer Richard Saperstein, “Big tech valuations have expanded but are not excessive given the relentless expansion of the AI and data center ecosystem.”
Saperstein says a “powerful combination of stable inflation, ongoing economic growth and expectations of declining interest rates” supports valuations for the broader market as well as the Nvidia-led Mag 7 stocks.
“We expect continued earnings growth, reinvestment of cash flows and expansion of their globally dominant footprints,” Saperstein writes. “Big technology stocks have led the market higher and will continue to dominate market performance.”
