The Dow Jones Industrial Average rose slightly on Thursday as investors awaited a key speech from the Federal Reserve's top official.
The 30-stock index climbed 49.51 points, or 0.2% to 26,252.24 in a volatile session that saw it rise as much as 186.05 points and drop 103.72 points. Boeing's 4.2% gain pushed the Dow higher. The S&P 500 ended the day just below the flatline at 2,922.95 while the Nasdaq Composite slid 0.4% to 7,991.39.
Fed Chairman Jerome Powell is set to deliver a speech Friday at a yearly central banking symposium in Jackson Hole, Wyoming. The stakes are high for Powell as investors will look for hints that the Fed will cut rates in September. Market expectations for a September rate cut are at 93.5%, according to the CME Group's FedWatch tool. The Fed cut rates by 25 basis points in July, citing "global developments" and "muted inflation."
Powell's speech comes as President Donald Trump continues attacking the U.S. central bank, pressuring it to lower rates. On Thursday, Trump tweeted: "The Economy is doing really well. The Federal Reserve can easily make it Record Setting."
"Trump is forcing these guys to move, but they shouldn't be doing anything. You've got tight unemployment and companies coming out with pretty good earnings — especially the retailers," said Larry Benedict, founder of The Opportunistic Trader. "I would be very surprised if he signaled something very dovish only because it would be a slap in the face of an independent Fed."
The speech also comes amid heightened recession fears. The benchmark 10-year Treasury yield briefly fell back below its 2-year counterpart once again on Thursday. Weak U.S. manufacturing data added to worries of a recession. IHS Markit said manufacturing activity in the U.S. contracted this month for the first time in nearly 10 years.
These fears have battered stocks in August. The Dow and Nasdaq are both down more than 2% each this month while the S&P 500 has lost 1.9%.
"Traders right now are on pins and needles," said Art Hogan, chief market strategist at National Securities. "We always feel like we're on the precipice of something really bad happening because there's a slowing global economy and an ongoing U.S.-China trade war."
Hogan pointed out, however, that the Fed is ready to cut interest rates if the U.S. economy slows down considerably while the U.S. consumer remains strong.
Other Fed officials raised concern about how certain a September rate cut was. Kansas City Fed President Esther George told CNBC's Steve Liesman that the Fed should not have cut interest rates last month, stating that "it wasn't required in my view." George is a voting member on the Fed's policymaking committee.
Meanwhile, Philadelphia Fed President Patrick Harker said he does not see the need for another rate cut, noting the central bank should keep rates at this level "for a while." Harker is a nonvoting member on the central bank's policymaking committee.
"We've now had two trial balloons from Fed officials saying 'We don't see any reason to lower rates in September,'" said Sam Stovall, chief investment strategist at CFRA Research. "I think the Fed is trying to shake the bushes and see how would the market react if they did not cut rates at all."
Nordstrom shares jumped more than 15% after the retailer reported quarterly earnings and revenue that topped analyst expectations. The company cited "inventory and expense discipline" for the strong results.
Dick's Sporting Goods closed 3.6% higher on better-than-expected results for the previous quarter. Comparable-store sales, a key metric for retailers, topped analyst expectations. The company also raised its full-year forecast.
—CNBC's Sam Meredith and Jeff Cox contributed to this report.