U.S. stock futures were pointing lower on Thursday, suggesting a sluggish open on Wall Street as investors remained cautious amid uncertainty surrounding interest rates and ahead of a critical speech from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium on Friday.
Powell’s remarks are expected to play a key role in shaping expectations for the Fed’s September policy meeting, as markets attempt to gauge whether the central bank will move ahead 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,” noted Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management.
Ahead of his address, CME Group’s FedWatch Tool showed markets pricing in a nearly 80% probability of a quarter-point cut next month.
Still, Kansas City Fed President Jeffrey Schmid pushed back against that view in a CNBC interview, saying policymakers need stronger confirmation before acting. He commented the central bank 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.”
Market sentiment also took a hit from Walmart (NYSE:WMT), which dropped 3.3% in premarket trading after posting weaker-than-expected second-quarter earnings.
On Wednesday, stocks staged a partial recovery after a sharp morning sell-off. The Nasdaq ended down 142.10 points, or 0.7%, at 21,172.86, while the S&P 500 slipped 15.59 points, or 0.2%, to 6,395.78. The Dow Jones Industrial Average eked out a small gain of 16.04 points, closing at 44,938.31.
Technology shares led the downturn for a second straight session, pressured by reports that the Trump administration is considering taking equity stakes in semiconductor manufacturers receiving CHIPS Act subsidies. White House Press Secretary Karoline Leavitt confirmed that Commerce Secretary Howard Lutnick was negotiating a deal to secure a 10% 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,” said 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.”
While some bargain hunters stepped in later in the session, losses persisted across multiple sectors. Airline stocks slumped, dragging the NYSE Arca Airline Index down 2.3%. Housing stocks mirrored the weakness, with the Philadelphia Housing Sector Index also falling 2.3%.
Additional declines were seen in computer hardware and steel names, whereas gold miners rallied on the back of higher bullion prices.
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