US Equities Slide on Risk Aversion Ahead of Jackson Hole

U.S. equities fell on Tuesday, led by a sharp selloff in AI and technology shares, as investors turned risk-averse ahead of the Jackson Hole symposium. The market digested mixed inflation signals while preparing for a pivotal week in monetary policy.

• The Nasdaq Composite dropped 1.65%, under pressure from the mega-cap tech stock declines.
• The S&P 500 followed suit, slipping 0.65%.
• The Down Jones Industrial Average held nearly unchanged, with the boost from retail heavyweight stock marginal gain.

Key Market Drivers: Tech Stocks Dragged

Heavyweights in AI and tech, including the Nvidia and Palantir, faced significant selling—Nvidia dropped 3.5% while Palantir plunged more than 9%–highlighting increased concerns over overvaluation.

At the same time, traders trimmed risk exposure ahead of Federal Reserve Chair Jerome Powell’s speech at Jackson Hole, where the market fears a hawkish shift in tone given sticky inflation data.

Meanwhile, sector rotation was evident: investors moved into rate-sensitive groups including homebuilders, healthcare, and financials, which showed relative resilience.

Market Ahead of Jackson Hole Symposium

Investor focus now turns to Powell’s speech at Jackson Hole on Friday. Markets remain highly sensitive to his tone—whether he emphasizes inflation vigilance or signals readiness to support growth through policy accommodation.

Historically, U.S. equities often experience selling pressure in the days leading up to the Jackson Hole Symposium, followed by a relief rally during or after the event.

However, with major U.S. indices currently trading at all-time highs, the market’s next move will largely depend on how Powell frames the outlook—whether he emphasizes lingering inflation risks or leans toward supporting growth with policy accommodation.

Market Reaction: VIX Edges Higher, Nasdaq Underperforms

The volatility index—VIX—ticked higher to 18.5 points on these two day, While this still remain well below the 20-point mark, suggesting a rising hedging demand against the uncertainty.

VIX Index, Daily Chart | Source: Ultima Market MT5

The volatility index (VIX) climbed to 18.5 points over the past two sessions. While still below the critical 20-point threshold, the uptick signals rising hedging demand as investors brace for potential swings around Powell’s remarks and the Jackson Hole Symposium.

“A sustained move above 20 would indicate heightened fear and risk aversion, but for now the increase suggests investors are positioning defensively rather than panicking,” said Shawn, Senior Analyst at Ultima Markets.

Meanwhile, the Nasdaq 100 Index failed to sustain above its recent record peak, slipping back after briefly setting a new high. The move points to profit-taking as investors turned cautious ahead of Jackson Hole.

NAS100 Index, 4-H Chart | Source: Ultima Market MT5

This price action does not resemble a panic-driven selloff, but rather a defensive adjustment. However, if Powell signals a more hawkish stance, the tech-heavy Nasdaq 100—highly sensitive to shifts in risk sentiment—could face a deeper pullback.

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