Stocks End Rally as Markets Wait for Jackson Hole

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Stocks closed lower Thursday ahead of the virtual Jackson Hole gathering of the Federal Reserve and the comments of the central banks chairman, Jerome Powell.

Initial jobless claims held near a pandemic low at 353,000 in the latest week.

The Dow Jones Industrial Average fell 192.38 points, or 0.5%. The S&P 500 and the Nasdaq Composite both declined about 0.6% as well.

Stocks had been on a roll the past several sessions, with the S&P 500 rising 2.1% from last Wednesday, when the index bottomed from a brief sell-off, to this Wednesday, when it logged a fresh all-time high.

After the global rally weve seen early in the week equity markets are pulling back mildly today, wrote Michael Reinking, chief market strategist at New York Stock Exchange.

Some investors may be taking profitsor sellingahead of the Fed event. It is hard to categorize this as a selloff and is really just some consolidation following the recent gains, Reinking says.

The market will listen for what Powell has to say about the future of the central banks bond-buying program. As theeconomy has strengthened, the Fed has signaledthat the process may begin soon, though the spread of the Covid-19 Delta variant has complicated matters.

What investors want to hear is that, in response to an impressive improvement in the economy, the Federal Reserve is planning to gradually reduce their extraordinary measures because theyre not necessary anymore, but will do so incrementally, said David Donabedian, chief investment officer of CIBC Private Wealth, US.

The pan-European STOXX 600 index was down 0.3%, with Germanys DAX index the leading decliner among major European bourses, slipping 0.4%.

A survey showed the mood of German consumers darkening, one day after another one showed similar pessimism among German businesses.

Shares of Deutsche Bank, Germanys largest private lender, were down 3.1% on the New York Stock Exchange after The Wall Street Journal reported that its management arm DWS Group was being investigated by U.S. regulators over claims it overstated efforts to use sustainable investing criteria to manage its assets. DWS Group shares were down nearly 14%.

Chinese blue chips as measured by the CSI 300 index fell 2%, and Hong Kongs Hang Seng Indexwas down 1.1%. Japans Nikkei 225 closed broadly stable.

The South Korean central bank was the first Asian central bank to raise its key interest rate since the pandemic, to an anticipated 0.75%, and Governor Lee Ju-yeol hinted that it might tighten policy further in light of the fast-growing economy.

The yield on benchmark 10-year Treasury notes was 1.35% compared with its U.S. close of 1.34% on Wednesday.

Oil prices were falling after three days of gains. Brent crude slipped 0.9% to $67.73.

Williams-Sonoma (ticker: WSM) stock rose 9.3% after reportinga profitof $3.24 a share, beating estimates of $2.60 a share, on sales of $1.95 billion, above expectations for $1.81 billion.

Dollar General (DG) stock dropped 3.8% afterreporting a profitof $2.69 a share, beating estimates of $2.59 a share, on sales of $8.7 billion, above expectations for $8.6 billion.

Dollar Tree (DLTR) stock fell 12.1% afterreporting a profitof $1.23 a share, beating estimates for $1 a share, on sales of $6.3 billion, below expectations for $6.4 billion.

Zoom Video Communications (ZM) stock rose 0.85% after getting upgraded to Overweight from Equal Weight at Morgan Stanley.

Yum! Brands (YUM) stock fell 2% after getting downgraded to Perform from Outperform at Oppenheimer.

Nordstrom (JWN) was down 8.5% after the department-store operator was downgraded to Underweight from Equal Weight at Morgan Stanley. Nordstrom stock dropped 18% on Wednesday after reporting earnings.

Corrections & Amplifications: Jerome Powell is chairman of the Federal Reserve. An earlier version of this article incorrectly identified him as the Feds president.

Write to Pierre Brian莽on at pierre.briancon@dowjones.com and Jacob Sonenshine at jacob.sonenshine@barrons.com

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