Stocks looked set to slide on Monday, as investors waited to see if a slew of speeches by Federal Reserve governors would bolster the market’s hopes for further interest-rate cuts.
Futures tracking the Dow Jones Industrial Average fell 105 points, or 0.2%. S&P 500 futures were 0.2% lower, and contracts tied to the Nasdaq 100 were down 0.2%.
The three gauges soared to record closing highs last week after the Fed interest rates for the first time since December, and signaled that more reductions could be on the way.
The challenge for Wall Street now is to find reasons to sustain the rally in what’s historically been a tough month for equities.
The main driver on Monday could be a series of comments from Fed officials, with Fed Gov. Stephen Miran and New York Fed President John Williams among those set to speak. Chair Jerome Powell is expected to discuss his economic outlook tomorrow, ahead of personal consumption expenditures data due Friday. The PCE is the Fed’s preferred inflation gauge, so a lower-than-expected reading could strengthen the case for further rate cuts.
Miran was picked by President Donald Trump to join the central bank’s board and was the lone dissenting voice at last week’s monetary policy meeting—wanting a larger half-point rate cut than the quarter-point reduction agreed by the other members.
“Stocks have been bucking the historical September weakness so far, thanks to an extremely favorable setup with Federal Reserve rate cuts, strong earnings, solid economic growth and muted inflation,” Rick Gardner, CIO of RGA Investments, said.
“The stock market’s strength is making it tougher to put new money to work, as valuations are rising, which makes it all the more important for investors to be selective,” he added.
The yield on the benchmark 10-year U.S. Treasury note climbed 1 basis point to 4.14% in early trading on Monday. Gold surged 1% to hit a fresh high of $3,743 an ounce, and the U.S. dollar was flat against a weighted basket of its peers.