SP500, Nasdaq, and Dow Jones News: US Futures Dip Amid Uncertain Q4 Fed Rate Path

US Futures Markets Dip as Focus Shifts to Key Data and Q4 Fed Rate Cut Bets

Futures falter as Fed cuts hang in the balance. Fed Chair Powell’s hints at an interest rate cut failed to extend Friday’s gains for the Dow, Nasdaq, and S&P 500 in the Asian morning trading session on Monday, August 25.

The Dow Jones E-mini fell 71 points, while the Nasdaq 100 E-mini and S&P 500 E-mini dropped 45 points and 11 points, respectively. 10-year US Treasury yields edged higher after Friday’s pullback, with higher rates making future earnings less valuable and pressuring US futures markets.

On Friday, August 22, Fed Chair Powell boosted bets on a September interest rate cut, stating that conditions “may warrant” rate cuts as downside risks build. According to the CME FedWatch Tool, the chances of a monetary policy easing in September rose from 85.4% on August 15 to 87.2% at the time of writing.

However, traders brace for a volatile fortnight. Uncertainties surrounding the Fed’s policy stance beyond September pulled US futures into negative territory. Upcoming US economic indicators could dictate the Fed’s rate path through the fourth quarter.

On Friday, August 29, the US Personal Income and Outlays Report will face scrutiny. While Fed Chair Powell focused on a softening labor market, A hotter PCE print could derail Q4 easing bets and rattle equity momentum. On the other hand, softer numbers may support multiple Fed rate cuts. Friday’s inflation numbers precede the crucial August Jobs Report, due September 5. These two reports will be essential for market sentiment.

Fed Speakers Under the Spotlight Post Powell

Later today, Fed speeches may offer further insights into the timeline for Fed rate cuts. Nick Timiraos, Chief Economics Correspondent at the Wall Street Journal, remarked:

“The debate among central bankers gathered in Wyoming suggests the focus is now shifting beyond the September meeting to whether the Fed will entertain cutting again at either of its final two meetings of the year, in October and December.”

Neil Sethi, Managing Partner at Sethi Associates, remarked on upcoming Fed speeches and the crucial US Jobs Report, stating:

“In terms of the Fed, there should be a number of speakers, but after Powell, we’re mostly just making time until the August NFP report on Sept 5th. On the calendar currently are Gov Waller and regional Fed President Logan, Barkin and Williams (Just Waller and Williams are voters this year).”

Key Asian Market Movers

Asian markets brush aside uncertainties about the Fed’s policy stance beyond September. Asian equity markets rallied in morning trading as investors reacted to Fed Chair Powell’s speech at the Jackson Hole Symposium. The Hang Seng Index jumped 1.96%, with Mainland China’s CSI 300 and Shanghai Composite climbing 1.98% and 1.33%, respectively. Meanwhile, the Nikkei 225 gained 0.68% on a softer Yen and hopes for a September Fed rate cut.

USD/JPY advanced 0.32% to 147.359, partially reversing the previous session’s 1% loss. The yen likely weakened on carry trades as investors borrowed Japanese Yen to buy Asian-listed stocks. Meanwhile, gold fell 0.16% to $3,366, underscoring positive sentiment in the Asian market session.

Monday’s Asian session saw no major economic releases. However, economic indicators from Japan and China may affect risk appetite. Strong data from Japan (out on August 29) could fuel Bank of Japan rate hike bets, potentially weighing on risk assets. Chinese economic data (out on August 27 and 31) and stimulus measures from Beijing will also influence sentiment.

Technical Setups: Dow, Nasdaq, and S&P 500 E-Minis at Key Resistance

Despite today’s pullback, the broader short-term bias remains bullish, hinging on corporate earnings, key economic indicators, and FOMC guidance.

Dow E-mini

• Resistance: August 22 high of 45,841, 46,000, then 46,500.
• Support: August 21 low of 44,642 and the 50-day EMA (44,280).

Nasdaq 100 E-mini

• Resistance: August 18 high of 23,882, 24,000, then 24,500.
• Support: August 20 low of 23,035 and the 50-day EMA (22,987).

S&P 500 E-mini

• Resistance: August 22 high of 6,496 and 6,750.
• Support: August 20 low of 6,363 and the 50-day EMA (6,297).

Will corporate earnings, Fed speakers and US economic data trigger a heavier US market pullback? The next two weeks could be pivotal. Follow our live coverage and consult our economic calendar.