Markets Brace for Key Earnings, Inflation Data as Fed Signals Rate Cuts

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Index Update:  Markets are focused on key earnings this week, with Nvidia and CrowdStrike reporting Wednesday, followed by Dell and Marvell on Thursday, and on Friday’s release of the Fed’s preferred inflation gauge, the PCE index. Wall Street rallied strongly Friday after Fed Chair Powell signaled potential rate cuts as soon as next month, lifting expectations for a September cut to 87%.

Market Movers:  On Friday, the top gainers were Cognition Therapeutics, Inc. (+41.21%), followed by Opendoor Technologies Inc. (+39.17%). On the contrary Zeta Network Group. (-94.71%), and Aptorum Group Limited (-37.88%) declined the most the same day.

Commodities Update:  Crude oil prices held firm, with WTI near $64 and Brent around $68 per barrel, supported by ongoing supply risks and expectations of U.S. monetary easing. Drone attacks by Ukraine on Russian energy infrastructure, along with U.S. threats of sanctions and higher tariffs on India over Russian crude imports, fueled concerns over disruptions. Optimism over potential Fed rate cuts further boosted demand prospects amid a weaker dollar. Gold prices dipped to about $3,360 per ounce after a strong prior session, as the dollar attempted to recover following dovish comments from Fed Chair Jerome Powell. Markets now largely expect a September rate cut, while escalating Russia-Ukraine tensions continue to underpin gold’s safe-haven appeal.

Macro Updates:  Dollar Rebounds as Markets Weigh Fed Policy Outlook

The dollar index climbed toward 98, partially recovering from last session’s drop after Fed Chair Powell signaled potential rate cuts in his Jackson Hole speech. Powell highlighted labor market risks and ongoing restrictive policy, prompting markets to price in an 87% chance of a September rate cut. Focus now shifts to Friday’s PCE inflation data for further cues.

Trump Launches Tariff Probe on Imported Furniture

President Trump announced a major investigation into imported furniture under Section 232, signaling possible new tariffs to protect national security. The probe, set to conclude within 50 days, could serve as a backup if current reciprocal tariffs face legal challenges. Trump said the move aims to boost U.S. manufacturing and revive jobs in key states.

Bonds Commentary:  The 10-year U.S. Treasury yield held near 4.27% after dropping sharply on signals from Fed Chair Powell that a rate cut may come at the next meeting. Powell highlighted labor market risks and noted policy factors influencing the economic outlook. Markets now see an 87% chance of a 25 bps September cut, with focus shifting to Friday’s PCE inflation data for further guidance.

Futures Update:  U.S. stock index futures edged lower in pre-market trading after a sharp Wall Street rally driven by dovish remarks from Federal Reserve Chair Jerome Powell signaling near-term rate cuts. Investor attention remains on upcoming earnings from AI leader NVIDIA for insights into the sector’s growth. The recent rally reversed much of the prior losses as markets priced in a potential Fed rate cut in September. S&P 500, Nasdaq 100, and Dow Jones futures all traded slightly lower.

Following a decline over the past several sessions, stocks experienced a significant rebound during Friday's trading, as noted in our previous commentary. The S&P 500 climbed by 96.74 points, or 1.52%, closing at 6,466.92. From a technical perspective, the index found support at key levels and gradually moved higher, indicating a cautious outlook for further upward movement in the near term. However, today’s session may see some consolidation. Additionally, the 14-day RSI reversed from the midpoint, further supporting a positive bias. Key support levels are around 6,366, with resistance near 6,555.