All Eyes on the Fed: Wall Street Awaits Potential Rate Cut

U.S. stock index futures slipped after gains, influenced by Fed Chair Powell's hint at potential interest rate cuts. Recent data highlights labor market concerns, while inflation remains a pivotal issue. Nvidia's results and other corporate moves add to market dynamics, against a backdrop of cautious economic optimism.

U.S. stock index futures dipped on Monday, a stark contrast to last session's rally. This shift follows Federal Reserve Chair Jerome Powell's indication that an interest-rate cut might be considered at the bank's upcoming meeting. Economic indicators pointing to labor market challenges have boosted investor hope for a dovish Fed stance despite lingering inflationary concerns tied to tariffs.

The Personal Consumption Expenditures Price Index, the Federal Reserve's inflation metric of choice, is set for release on Friday. This, alongside next week's nonfarm payroll data, will significantly influence market sentiment as Powell's dovish assertions seem less than certain. Market strategist David Chao noted ongoing worries about tariff-related price increases, though he insists inflation expectations remain stable.

Major brokerages Barclays, BNP Paribas, and Deutsche Bank have adjusted their forecasts to anticipate a 25-basis-point rate cut, a move reflected by traders who now place a September reduction chance at 84.2%. Meanwhile, Nvidia's upcoming results and its $4 trillion valuation are hot topics as traders assess Wall Street's highs. In deals news, Keurig Dr Pepper and Verint Systems announced significant acquisitions, adding further intrigue to market dynamics.

(With inputs from agencies.)