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26.08.2025 09:17 AM
US stock markets ended Monday's session in negative territory as investors paused after last week's rally to reassess the outlook for interest rates and await Nvidia's earnings report, one of the most anticipated events of the week.
Friday brought a strong market rebound after Federal Reserve Chair Jerome Powell hinted at the Jackson Hole symposium that a rate cut could be considered in September. His remarks, citing recent labor market weakness, fueled hopes for a policy shift.
On Wednesday, all eyes will be on Nvidia, which is set to release its quarterly results. Shares of the chipmaker edged up about one percent ahead of the announcement. The report is seen as a critical test for the booming artificial intelligence sector. With Nvidia accounting for nearly eight percent of the S&P 500, its performance has a direct impact on millions of Americans who invest through index funds for retirement savings.
Powell's comments pushed major financial institutions to revise their forecasts. Barclays, BNP Paribas, and Deutsche Bank now expect the Fed to lower rates by 25 basis points at its September meeting.
According to CME Group's FedWatch tool, traders currently price in an 84 percent chance of a rate cut next month. Investors will also be closely analyzing upcoming statements from Fed officials John Williams and Lorie Logan to see whether they align with Powell's stance.
Caution dominated Monday's trading session in New York as all three major indexes finished in the red.
Closing figures:
Nine out of eleven major S&P 500 sectors declined. Consumer staples led the losses, falling 1.62%, followed by healthcare, which shed 1.44%.
The pullback came just days after Friday's rally, when the Dow Jones closed at a record high for the first time since December 2024. The S&P 500 also marked its strongest one-day advance since May.
Jefferies became the latest brokerage to lift its year-end target for the S&P 500, signaling confidence in the broader market's resilience despite the day's sell-off.
The day's standout corporate story came from Keurig Dr Pepper. Shares of the beverage company plunged more than 11% after it announced a cash deal worth 18.4 billion dollars to acquire coffee and tea group JDE Peet's.
The takeover, one of the largest in the global food and beverage sector in recent years, is aimed at strengthening the company's international presence and diversifying its portfolio. Yet, investors expressed concerns over the size of the transaction, pointing to possible debt pressure and short-term risks to financial stability.
The US dollar and long-term Treasury bonds weakened on Tuesday after President Donald Trump announced the dismissal of the Federal Reserve's chair. The unprecedented move has raised fresh doubts about the central bank's independence and eroded confidence in US assets.
Asian equities mirrored Wall Street's losses, with investors unsettled by the uncertainty over the Fed's future course and the outlook for an interest rate cut next month.
Gold climbed to a two-week high as traders sought safer assets, while US stock futures slipped after Trump revived threats of new tariffs against key trading partners.
The euro inched up 0.1 percent to 1.1631 dollars. The Japanese yen held steady at 147.82 per dollar after gaining more than half a percent the previous day. The dollar index, which tracks the currency against a basket of peers, dipped 0.1 percent after a sharp 0.7 percent advance on Monday.
The MSCI index of Asia-Pacific shares outside Japan fell 0.5 percent, while Japan's Nikkei dropped 0.9 percent.
European futures also opened lower: Euro Stoxx 50 futures slipped 0.53 percent, German DAX futures were down 0.45 percent, and UK FTSE futures declined 0.35 percent. US S&P 500 e-mini futures edged down 0.07 percent.
Global investment banks including Barclays, BNP Paribas, and Deutsche Bank now expect the Federal Reserve to trim interest rates by 25 basis points in September. According to CME Group's FedWatch tool, futures markets are currently pricing in an 83 percent chance of such a move.
President Donald Trump once again rattled markets with threats of new trade barriers, warning that additional import tariffs could be imposed on countries that apply digital taxes. The remarks revived concerns about the recurring uncertainty tied to tariff disputes that have unsettled investors for months.
In commodities, oil and gold moved in opposite directions. US crude prices declined by 0.5 percent to 64.48 dollars per barrel. Gold, on the other hand, climbed 0.2 percent to 3373.32 dollars an ounce, briefly touching 3386.27 dollars — the highest level since August 11.
