US stock markets continued to slide on Wednesday, with losses sustained by the weak tech sector. The NASDAQ Composite was the poorest performer, down 1.1%, while the S&P 500 Index fell by 0.6%. 

The dips are part of a larger pattern of technology and semiconductor declines, which includes such stocks as NVIDIA and Palantir Technologies. NVIDIA dropped 3% and Palantir plummeted 5.5%, their worst week since February.

Investors are becoming less confident in tech stocks' high valuations, and some analysts are beginning to wonder about the longevity of the AI-driven rally. Stocks are overpriced in comparison to fundamentals or reality, said Howard Marks, co-chairman of Oaktree Capital Management, speaking to Bloomberg TV. 

His statements indicate apprehension about the market's risk of correction, particularly following an extended period of 16 years without experiencing a substantial market correction. This environment has created a situation where traders are increasingly turning to earnings releases and economic indicators to evaluate the market movement.

Mixed Retail Earnings Reports

Retail earnings reports added complexity to the market's outlook. Some of the companies performed better than expected, but some failed under the pressure of consumers. Target Corp. fell, declining in sales and falling more than 8 percent on the stock exchange, making it the worst performer on the S&P 500. The company also appointed a new chief executive to oversee its restructuring efforts, which investors are also reading as a potential change at the management desk.

On the other hand, retailers such as Lowe and TJX Cos. recorded favorable results exceeding expectations. Lowe reported better-than-expected margins, which pushed the stock a little higher. Meanwhile, TJX increased its full-year earnings forecast, as there were more positive consumer spending signals. 

However, Torsten Slok warned that consumer spending is already strained, pointing to struggling job gains and the resumption of student loan payments as likely to weigh on the retail sector.

Federal Reserve Minutes and Jackson Hole Symposium

Federal Reserve action is now the focus as the market shifts to it. Investors are paying close attention to the minutes of the July Fed meeting, which are being released today, and the much-awaited Jackson Hole symposium, which is coming up this week. Federal Reserve Chair Jerome Powell will speak on Friday at the symposium, which could provide clues into the current direction of interest rates.

The general market is anticipating a discussion on inflation and the job market by Powell. Investors have been hoping to see the indication of a rate cut in September, especially following the recent labor market data that shows signs of a slowdown. 

Carol Schleif, chief market strategist at BMO Private Wealth, said that "investors have high hopes that Jerome Powell will use Jackson Hole to set the stage for a September rate cut."

The policy decisions of the central bank are a key factor in the determination of market direction in the coming months as the central bank struggles with inflation and slower growth.

Key Takeaways for Investors

Under pressure due to unstable tech stocks and inconsistent retail profits, the market is focusing on the Federal Reserve's next moves. Investors are also looking forward to getting some clarity on interest rate policy, with the September meeting in mind. 

The Jackson Hole symposium later this week is certainly capable of providing the needed cues, as many suspect that the Fed will respond to these changing economic conditions.

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