FOMC Officials Signal a “Slow & Steady” approach to Rate Cuts – US Market Wrap

Bond yields rose and stocks fell, with traders betting Jerome Powell will deflate market expectations for aggressive interest rate cuts this year.

Treasuries fell ahead of Powell’s speech in Jackson Hole, with shorter maturities driving the move. The dollar rose. After approaching an all-time high, the S&P 500 lost steam. Megacap stocks in technology have fallen in value. The swap market has confirmed that the Federal Reserve will ease policy by one percentage point this year, beginning in September, with the possibility of a 25- or even 50-basis-point cut.

Wall Street traders waded through a slew of comments from US policymakers, including Fed Bank of Kansas City President Jeffrey Schmid, who said he wants to see more data before supporting cuts. His Boston counterpart, Susan Collins, believes “a gradual, methodical pace” will be appropriate. Patrick Harker, President of the Philadelphia Fed, echoed her comments in a CNBC interview.

Treasury 10-year yields rose six basis points, to 3.86%. The S&P 500 fell 0.9%. The Nasdaq 100 fell 1.7%, with Nvidia leading the decline in big tech. Intel fell 6.1%. Bank stocks rose, as did energy shares, which followed oil higher.