The mega-cap tech names, which had been powering the market higher in recent months, are now the ones leading on the way down. Crude oil prices could be delivering an ominous signal, which could be in turn dragging risk asset prices lower.
After posting its best August in more than 30 years, the equity markets produced a sharp turnaround that featured the return of bearish sentiment. At its low point, the Nasdaq 100 was more than 10% off of its highs achieved just earlier in the week.
This past week’s Jackson Hole testimony from Jerome Powell, in which the Fed made a significant change to its inflation targeting policy, was the biggest development, although it’s less than clear how it immediately impacts the markets. Equities and gold didn’t have much of a reaction, since this has been rumored for several months, but Treasury yields moved up to their highest level since early June before pulling back at the end of the week.