Market Volatility Persists as Fed Signals Interest Rate Decision
U.S. Federal Reserve Chair Jerome Powell's hints at a potential interest rate cut led to a dip in Wall Street indexes. Economic data showing labor market weakness spurred speculation of a dovish Fed stance in September. Traders now expect a high chance of a rate cut, despite inflation concerns from tariffs.
Market reactions were mixed on Monday as Wall Street's main indexes fell, following a promising session driven by U.S. Federal Reserve Chair Jerome Powell's remarks suggesting an interest-rate cut at the next central bank meeting. Economic indicators hinting at labor market strain raised hopes for a dovish stance from the Fed in September.
Focus turns to upcoming reports, including the Personal Consumption Expenditures Price index and official nonfarm payrolls data, which will be pivotal after Powell refrained from guaranteeing a dovish outcome. Analyst Thomas Hayes emphasized the job report's primacy over inflation data in influencing the Fed's decision on a rate cut.
As major brokerages adjusted their projections, the chance of a September rate cut climbed to 79.6%, according to LSEG data. The Dow Jones, S&P 500, and Nasdaq all posted morning declines. Meanwhile, sectors such as consumer discretionary led losses, while Nvidia's anticipated earnings and a significant purchase by Keurig Dr Pepper captured market attention.
(With inputs from agencies.)
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