Stock Market Today: Investors Assess Path of Fed Interest Rate Cuts

• US stocks started the week slightly higher as investors assessed the path of interest rates
• Fed Chairman Powell hinted at imminent rate cuts, but the timing and depth of cuts is uncertain.
• Upcoming inflation and jobs data will influence the Fed’s policy decisions.

US stocks traded slightly higher on Monday as investors assess the potential path of future interest rate cuts from the Federal Reserve.

Fed Chairman Jerome Powell indicated that interest rate cuts were imminent in his speech at Jackson Hole on Friday, uncertainty remains as to how aggressive the Fed will be in cutting rates.

While the CME FedWatch Tool sees a 100% chance of a Fed rate cut in September, there’s a 65% chance of a 25 basis point rate cut and a 35% chance of a 50 basis point rate cut.

“Fed Funds Futures are discounting a steady diet of rate cuts over the next 12 – 16 months that eventually end with policy rates equal to the neutral rate. That is consistent with further economic growth, not recession,” DataTrek Research co-founder Nicholas Colas said in a note on Monday.

The future path of inflation and the resilience of the labor market will determine the path and intensity of interest rate cuts.

Investors will get their next inflation reading on Friday with the release of the PCE Index, which is considered the Fed’s most preferred inflation gauge.

For the current state of the jobs market, investors will pay attention to the weekly release of initial jobless claims on Thursday, followed by the August jobs report next week.

Aside from the Fed, investors are paying close attention to the tail-end of second-quarter earnings, with Nvidia and Salesforce set to report earnings on Wednesday after the market close.

Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Monday:

Here’s what else is going on today:

In commodities, bonds, and crypto:

• West Texas Intermediate crude oil increased 3.13% to $77.17 a barrel. Brent crude, the international benchmark, jumped 2.78% to $81.22 a barrel.
• Gold was higher by 0.59% to $2,561.40 an ounce.
• The 10-year Treasury yield dipped two basis points to 3.786%.
• Bitcoin dropped 0.68% to $63,830.