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U.S. stock index futures dipped slightly on Monday as Wall Street took a breather following its strongest week of the year. Investors are now turning their attention to the upcoming speech by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium, which could provide crucial insights into the central bank’s future monetary policy.
Last week, all three major U.S. indexes surged, buoyed by a series of economic data, including the consumer price index (CPI) and retail sales reports, that suggested the U.S. economy might achieve a soft landing rather than slipping into a recession.
Goldman Sachs has responded to this data by lowering its estimate of the likelihood of a U.S. recession in the next 12 months from 25% to 20%, reflecting growing confidence in the economy following favorable jobless claims and retail sales figures.
Over the weekend, notable Federal Reserve officials expressed differing views on the central bank’s next steps. Chicago Fed President Austan Goolsbee suggested that not cutting rates in September could negatively impact the job market. Meanwhile, San Francisco Fed President Mary Daly hinted in an interview that it might be time to consider adjusting borrowing costs.
As traders await Powell’s speech on Friday, they are closely watching for any indications that the Fed might reduce interest rates in September. According to the CME FedWatch Tool, there is currently a 72% probability that the Fed will cut rates by 25 basis points, a shift from last week’s 50-50 split between a 25 and 50 basis point cut.
Additionally, minutes from the Fed’s last policy meeting are set to be released on Wednesday, and comments from Fed Board Governor Christopher Waller later that day will also be closely monitored by investors.
