U.S. stock index futures edged lower in premarket trading Monday, following sharp gains on Wall Street after dovish remarks from Federal Reserve Chair Jerome Powell signaled the prospect of near-term interest rate cuts.
Investor attention this week is firmly on earnings from artificial intelligence leader NVIDIA Corporation (NVDA), widely seen as a key indicator for the rapidly expanding AI sector.
On Friday, U.S. equities surged, erasing much of their recent losses as markets priced in a stronger likelihood of a September rate cut by the Fed.
By 06:17 ET (10:17 GMT), S&P 500 Futures slipped 0.24% to 6,451.25, Nasdaq 100 Futures declined 0.32% to 23,424, and Dow Jones Futures were down 0.22% at 45,532.0.
Powell Signals Potential Rate Cut, Wall Street Rallies
Speaking at the Jackson Hole Symposium on Friday, Powell said the Fed may cut rates in September amid mounting risks to the labor market. However, he cautioned that the decision was not finalized, citing persistent inflation concerns and uncertainty surrounding the impact of President Donald Trump’s trade tariffs.
Still, Powell’s tone was notably more dovish than recent Fed communications, prompting markets to increase bets on a September cut. U.S. indexes rallied in response, recovering most of last week’s declines.
On Friday, the S&P 500 gained 1.5% to close at 6,466.91, the Nasdaq Composite rose 1.9% to 21,496, and the Dow Jones Industrial Average jumped 1.9% to a record 45,631.74. The U.S. Small Cap 2000 outperformed, surging 3.9% after Powell’s remarks.
“Small Caps run the risk of seeing only a short-lived outperformance trade once again, particularly if the economic concerns that appeared to open the door for a September cut ultimately come to fruition,” said RBC strategist Lori Calvasina.
Markets now assign roughly an 89% probability of a 25 bps rate cut in September, with a 49% chance of another 25 bps reduction in December.
Nvidia Awaited for More Cues on AI
All eyes this week are on NVIDIA Corporation’s (NVDA) second-quarter earnings, scheduled for release Wednesday.
Widely viewed as a bellwether for AI demand, the company is expected to deliver another strong quarter. However, investors will be closely monitoring its China business, which has likely weakened amid recent U.S. export restrictions and heightened Chinese scrutiny of AI chips. Nvidia reportedly halted production of its China-specific H20 chip last week.
The results come after a sustained selloff in technology stocks, as markets questioned the durability of AI-driven profitability.
Beyond Nvidia, corporate earnings this week will also include Dell Technologies (DELL), Dick’s Sporting Goods (DKS), Best Buy (BBY), Dollar General (DG), and Abercrombie & Fitch (ANF).
Additionally, second-quarter GDP data is due later this week, following preliminary July figures that pointed to resilient growth.
