What’s driving markets

Worries about a hawkish turn from the Federal Reserve continued to weigh on markets on Wednesday. Since hitting a near four-month high on Aug. 16, the S&P 500 index has swiftly retreated 4.1% as investors reconsidered whether the Fed would soon pivot toward a slower pace of interest-rate hikes.

Comments late on Tuesday from Minneapolis Fed President Neel Kashkari reinforced the notion that the Fed plans to continue aggressively raising interest rates for the foreseeable future.

After hearing from a bevy of senior Fed officials over the past month, investors are anxious to hear from Powell, said Paul Nolte, a portfolio manager at Kingsview Asset Management.

“Powell is the only one who we haven’t heard from since the July meeting. Powell is the most dovish on the board it seems and we all want to figure out what it is he’s looking at and how he’s thinking about things here,” Nolte said.

The shift in Fed policy expectations have pushed up benchmark borrowing costs and helped force the ICE Dollar Index
DXY,
+0.23%
to fresh 20-year highs, adding to the headwinds facing U.S. stocks.

Record high energy costs in Europe, which have raised fears of a recession in Germany, are also weighing on sentiment. Investors have also digested weak purchasing-managers index data out of the U.S. and Europe earlier this week.

Fed chair Jay Powell is due to make a speech on Friday at the Jackson Hole symposium.

The economic data calendar in the U.S. was relatively light Wednesday as investors digested flat durable-goods orders for July. Investors also saw a report on pending home sales, which followed an unexpectedly weak report on new home sales released Tuesday.

While the second-quarter earnings season is nearly over, investors still have a few closely watched reports from major tech firms arriving after the bell, including updates from Nvidia
NVDA,
-0.03%,
Salesforce
CRM,
+1.55%
and Snowflake
SNOW,
+3.53%.

Meanwhile, the saga of meme-stock favorite Bed Bath & Beyond
BBBY,
+14.45%
took another twist after the Wall Street Journal reported the struggling retailer had lined up a financing source to shore up its liquidity.

Single-stock movers

• Shares of Peloton Interactive Inc.
  PTON,
  +18.16%
  rocketed higher after the company announced a deal to sell its products on Amazon.

• Nordstrom Inc.
  JWN,
  -18.32%
  shares fell nearly 20% after the company lowered its sales and profit guidance for the year.

• Shares of Urban Outfitters Inc.
  URBN,
  -0.18%
  were up 1% after the company reported earnings after the bell on Tuesday.

How are other assets faring

• Oil futures were higher with U.S. crude
  CL.1,
  +0.51%
  adding 0.5% to $94.19 a barrel, ahead of the U.S. weekly energy inventory data due at 10:30 am Eastern.

• The 10-year Treasury yield
  TMUBMUSD10Y,
  3.111%
  rose 4.9 basis points to 3.096% while the German 10-year bund yield
  TMBMKDE-10Y,
  1.379%
  rose 5.4 basis points to 1.378%.

• Gold
  GC00,
  +0.10%
  dipped 0.1% to $1,760 an ounce.

• Bitcoin
  BTCUSD,
  +0.12%
  fell 0.7% to $21352.

Hear from Carl Icahn at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The legendary trader will reveal his view on this year’s wild market ride.