Wall Street Closes Mixed On Nervous Trade

US markets have seen a choppy day, on lacklustre economic data ahead of a key Federal Reserve address.

The Dow Jones was up 0.2 percent at 26,252. But the S&P 500 slipped 0.1 percent to close at 2,922, while the Nasdaq Composite lost 0.3 percent to 7,991.

Stocks had opened higher, but tumbled around the same time as the US Treasury market experienced another yield "inversion" in which the return on 10-year notes fell below that of two-year notes, a worrisome development seen as sign of a possible recession.

Markets have been volatile throughout August amid concerns about worsening trade tensions, softening global growth and a weakening US manufacturing sector. Trading volumes also are low during the summer holiday season which contributes to bigger swings in prices.

Data from IHS Markit showed a US business activity index dropping from 52.6 in July to 50.9, barely above the 50 level that separates growth from contraction, after manufacturing activity slowed to the lowest since September 2009.

Gregori Volokhine, fund manager at Meeschaert Financial Services, said lacklustre European data and the ongoing US-China trade war are weighing on sentiment.

"There's a fear of a global slowdown and a sense that a 25- or 50-basis interest rate cut won't have much effect," Volokhine said, alluding to expectations that the US Federal Reserve will cut interest rates again next month.

Investors are awaiting a speech on Friday by Fed chairman Jerome Powell at the annual central bank conference in Jackson Hole, Wyoming that some analysts expect will signal a likely interest rate cut next month.

But if his message is opaque - which it might be given the number of regional Fed officials voicing reticence to cut again so soon -- markets could be in for a wild ride Friday.

Futures investors still overwhelmingly expect the Fed to cut interest rates in September, but 6.5 percent now see no change, which is up from zero last week. (AFP)