US stock futures stabilized on Friday after the major averages fell sharply in the previous session, as investors look ahead to Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium later in the global day to guide the outlook on interest rate cuts. Powell is widely expected to signal that the Fed will start dialing back policy restrictiveness in September, with limited clues on the frequency and magnitude of the reductions. In regular trading on Thursday, the Dow fell 0.43%, the S&P 500 dropped 0.89% and the Nasdaq Composite tumbled 1.67%. Eight out of the 11 S&P sectors declined, led to the downside by technology, consumer discretionary and communication services. Megacap tech names led the selloff, with sharp losses from Nvidia (-3.7%), Tesla (-5.7%) and Microsoft (-2%). Snowflake also plunged 14.7% after issuing a weak sales outlook. In extended trading, Cava Group and Ross Stores jumped 9% and 5.6%, respectively, on upbeat earnings.
The Euro dipped below $1.113, retreating from an over one-year high of $1.117, as new data showed a slowdown in Euro Area wage growth, bolstering the case for the European Central Bank to continue cutting interest rates. Negotiated wage growth in the Eurozone fell to 3.55% in Q2, down from 4.74% previously, driven primarily by a significant slowdown in Germany. This easing of wage pressures supports expectations for an ECB rate cut in September, especially since the bank has emphasized wage growth as a key factor in its policy decisions. Markets now see a more than 90% chance of a September rate cut, with additional reductions likely by year-end due to weak economic conditions. Meanwhile, business activity in the Eurozone showed mixed signals, with strong growth in France contrasting with a decline in Germany. In the US, the latest Federal Reserve minutes suggested a probable rate cut in September, possibly as large as 50 basis points, due to revised nonfarm payroll data.
