U.S. stock futures turned lower on Monday morning, erasing some of the excitement from Jerome Powell’s Jackson Hole remarks that sent markets to record levels on Friday. Dow futures were down about 80 points, or 0.2 percent, while S&P 500 and Nasdaq 100 futures slipped 0.2 percent and 0.3 percent.
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On Friday, the Dow surged to a record high after Powell opened the door to rate cuts in September. Traders quickly priced in an 87 percent chance of a 25-basis-point cut, up from 62 percent just a month ago. The enthusiasm was undeniable, but by Monday, reality set back in. Futures markets signaled that the rally may have overshot.
Powell Promises Gradual Easing
Powell gave markets what they wanted, but not everything. He suggested that a “gradual pace of easing would be appropriate,” according to economists at Nomura (NMR). That language cooled any speculation about a bold 50-basis-point cut or back-to-back moves. Instead, the Fed seems set on a measured approach, more cautious than markets had hoped.
The yield on the benchmark 10-year Treasury was steady at 4.27 percent, showing that bond traders had already priced in the dovish shift and are now waiting for confirmation from the data. It is a reminder that Friday’s fireworks may have been more emotional than rational.
Traders Still Need Proof
For all the optimism, Powell left himself wiggle room. He did not commit to a cut outright, only that the “baseline outlook” could justify one. Barclays economists were quick to remind clients that “the door for another hold is not closed.” If jobs come in strong or inflation surprises to the upside, the Fed may keep rates unchanged in September.
That is why Monday brought hesitation. Investors know the next two weeks of data on wages, payrolls, and inflation will be critical. Without softer numbers, Powell’s hint could turn into another disappointment.
Focus Now Shifts to Corporate Earnings
With Powell’s speech digested, traders are now bracing for corporate news. Nvidia (NVDA) reports earnings on Wednesday, and its comments on AI demand will set the tone for one of the market’s most crowded trades. AI stocks were hit hard last week on bubble fears, making this report an important moment.
Furniture stocks such as Wayfair (W) and Williams-Sonoma (WSM) are also in focus after President Trump launched a Commerce Department probe into imported furniture tariffs. Meanwhile, Keurig Dr Pepper (KDP) announced an $18 billion deal to buy Peet’s Coffee owner JDE Peet’s (DE:JDE), planning to later spin off its coffee brands as a separate company.
Key Takeaway
The Fed has shifted tone, but not yet policy. Powell cracked the door open to easing, and markets rushed through it. Monday’s pullback shows how fragile that optimism is. The September meeting now hangs on the next round of data, and traders know it.
Currently, Wall Street is digesting a sugar high from Powell’s words. Now, it’s down to whether the economy delivers the numbers to keep that rally alive.
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