Selloff in big tech halts US stocks’ record-breaking rally.
by Andre Janse van Vuuren and Sagarika Jaisinghani
US stock futures have paused their recent decline in uncertain trading ahead of Federal Reserve Chair Jerome Powell’s speech at Jackson Hole, as investors temper their expectations for immediate rate cuts.
S&P 500 futures increased by 0.1% after the index experienced five consecutive sessions of declines. Futures for the Nasdaq 100 saw little change. European markets rose 0.2%, edging closer to an all-time high, while US Treasuries remained stable following Thursday’s losses, with the 10-year yield at 4.33%.
A downturn in major tech stocks has interrupted the rally of US stocks as investors await Powell’s latest guidance on monetary policy and assess whether the Fed will remain cautious regarding inflation or shift towards supporting a softer labor market.
Market expectations for aggressive near-term easing have significantly diminished, with current pricing indicating about a 70% likelihood of a rate cut next month, and fewer than two reductions are anticipated this year. Just over a week ago, traders anticipated a full quarter-point cut in September, with some even speculating a half-point decrease.
The situation is complicated by pressure from the Trump administration to lower rates and growing disagreements within the Fed’s monetary policy committee. To retain flexibility, Powell may highlight that the Fed’s decision in September will depend on upcoming employment and inflation data.
“If the Fed doesn’t cut in September, markets will drop since they expect action. However, if they cut too aggressively, it may suggest a loss of independence, potentially leading to higher inflation,” explained Joachim Klement, a strategist at Panmure Liberum. “It’s like Goldilocks faced with two bears and a bull.”
- The Stoxx Europe 600 increased by 0.2% as of 9:24 a.m. London time.
- S&P 500 futures saw a rise of 0.1%.
- Nasdaq 100 futures were relatively unchanged.
- Futures on the Dow Jones Industrial Average gained 0.2%.
- The MSCI Asia Pacific Index climbed by 0.2%.
- The MSCI Emerging Markets Index rose by 0.2%.
- The Bloomberg Dollar Spot Index remained mostly stable.
- The euro fell by 0.1% to $1.1594.
- The Japanese yen decreased by 0.1% to 148.58 per dollar.
- The offshore yuan was unchanged at 7.1838 per dollar.
- The British pound held steady at $1.3411.
- Bitcoin rose by 0.7% to $113,190.33.
- Ether increased by 2.4% to $4,341.84.
- The yield on 10-year Treasuries remained stable at 4.33%.
- Germany’s 10-year yield held steady at 2.75%.
- Britain’s 10-year yield rose one basis point to 4.74%.
- Brent crude oil increased by 0.1% to $67.75 a barrel.
- Spot gold decreased by 0.3% to $3,327.66 an ounce.
This article was produced with the assistance of Bloomberg Automation.
