U.S. equity futures slipped on Thursday, signaling continued weakness for Wall Street as investors brace for Federal Reserve Chair Jerome Powell’s appearance at the Jackson Hole Economic Symposium. Lingering uncertainty over the direction of interest rates has weighed heavily on sentiment, keeping markets on edge ahead of the September policy meeting.
Powell’s comments are expected to be pivotal in shaping expectations for whether the Fed will move forward with a rate cut.
“Powell is likely to keep his cards close to his vest, emphasize that the Fed cares very much about their dual mandate and explain that they are data dependent and will need to see the jobs report (9/5) and the two inflation reports (9/10-9/11) before they can make a determination whether or not to cut interest rates on September 17th,” explained Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management.
Data from CME Group’s FedWatch Tool showed traders assigning a 79.1% chance of a quarter-point reduction in September.
However, Kansas City Fed President Jeffrey Schmid expressed skepticism in a CNBC interview, warning that more evidence is needed before a policy shift. He stressed that the Fed must “have very definitive data to be moving that policy rate.” Schmid added, “In September, we’ll get around tables and we’ll collaborate and we’ll figure it out, but yeah, I think there’s a lot to be said between now and September.”
Adding to the bearish tone, Walmart (NYSE:WMT) shares tumbled 3.3% in premarket trade after its quarterly results fell short of forecasts.
On Wednesday, markets showed resilience after a steep early sell-off, though the recovery was uneven. The Nasdaq Composite shed 142.10 points, or 0.7%, finishing at 21,172.86. The S&P 500 closed down 15.59 points, or 0.2%, at 6,395.78, while the Dow Jones Industrial Average managed a slim gain of 16.04 points to 44,938.31.
The technology sector remained under pressure for a second day following reports that the Trump administration is evaluating taking direct equity stakes in semiconductor firms benefiting from CHIPS Act subsidies. White House Press Secretary Karoline Leavitt confirmed that Commerce Secretary Howard Lutnick was pursuing an agreement for a 10% U.S. government stake in Intel (NASDAQ:INTC).
“A positive spin on proceedings is that the stake taken by the US government may crowd in other investors and give them confidence to buy in,” noted Danni Hewson, head of financial analysis at AJ Bell. “Meanwhile the government taking partial ownership of a company in exchange for grants which were already offered might well send shivers down the spine of other businesses which rely on the largesse of the US state.”
Sector weakness was broad, with airline stocks dropping sharply as the NYSE Arca Airline Index slid 2.3%. Housing equities also stumbled, with the Philadelphia Housing Sector Index down by the same margin.
Losses extended into computer hardware and steel names, while gold stocks advanced as bullion prices bounced back.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.