Stock Market Today: Dow, Nasdaq, S&P 500 Futures Tumble Ahead Of PCE Data—Dell, Marvell, Alibaba Earnings In Focus
News Summary
U.S. stock futures fell on Friday ahead of the crucial Personal Consumption Expenditures (PCE) inflation data, which is expected to provide cues for the Federal Reserve's September interest rate decision. Markets are currently pricing in an 85.2% likelihood of a Fed rate cut at its September 17 meeting. This decline follows a strong Thursday session where the Dow, S&P 500, and Nasdaq all closed at new record highs. Market gains were driven by an upward revision of U.S. Q2 GDP growth to 3.3% (a sharp rebound from Q1's 0.5% contraction) and positive earnings reports from companies like Nvidia and Dollar General. Meanwhile, the ongoing attempt by President Trump to oust Federal Reserve Governor Lisa Cook saw a second criminal referral filed against her. In corporate news, Dell Technologies and Marvell Technology saw premarket declines after reporting weaker-than-expected results or outlooks, while Ulta Beauty and Autodesk advanced on upbeat earnings and guidance. Alibaba also fell premarket ahead of its earnings release. Analysts note that despite the S&P 500's recent record highs, September historically presents a challenging period for stocks, with an average return of -0.7%. However, when the S&P 500 enters September above its 200-day moving average, as it is now, the average return flips to a positive 1.3%.
Background
In 2025, the global economy is navigating a complex period marked by persistent inflation concerns alongside worries of slowing growth. The Federal Reserve's monetary policy trajectory, particularly the timing and extent of interest rate cuts, remains a central focus for markets. Against the backdrop of President Trump's re-election, his administration's interventions in federal agencies and officials, including potential influence on the Fed, also contribute to market uncertainty. U.S. stock markets have seen a sustained rally from late 2024 into the first half of 2025, largely supported by resilient corporate earnings, improving macroeconomic data (such as upwardly revised GDP growth), and expectations of imminent Fed rate cuts. Investors are closely scrutinizing economic data, particularly inflation gauges, to anticipate the Fed's next moves. Concurrently, the corporate earnings season significantly impacts individual stock performance and overall market sentiment.
In-Depth AI Insights
Given the market's high expectation for a September rate cut, how will the market react if the PCE data deviates from expectations? The market's 85.2% probability assigned to a September Fed rate cut suggests that much of the positive news is already priced in. If the upcoming PCE data, the Fed's preferred inflation gauge, reveals more persistent inflation than expected or fails to show a significant decline as the market hopes, several consequences could unfold: - The market might rapidly re-price its rate cut expectations, leading to short-term pressure on equities, particularly in high-valuation technology sectors. - Investors could reassess the Fed's hawkish stance, pushing up short-term Treasury yields and potentially strengthening the U.S. dollar. - The CBOE Volatility Index (VIX) could quickly surge from its current lows, reflecting increased market uncertainty. How do the Trump administration's ongoing interventions targeting Fed members impact long-term market perceptions of the Fed's independence and future monetary policy? President Trump's persistent actions against Fed Governor Lisa Cook, including criminal referrals, while seemingly personal, carry deeper implications that could erode market confidence in the Fed's independence, particularly as a rate-cutting cycle is anticipated: - Such actions could be perceived as attempts by the executive branch to exert pressure on the Fed's decision-making, thereby undermining its credibility. - In the long run, this could introduce greater uncertainty into the monetary policy path, as investors might fear future decisions could be driven by political interference rather than purely economic data. - If such interventions become a norm, it could negatively impact the dollar's international standing and the U.S.'s reputation as a safe haven for investment. What are the potential macroeconomic risks and investment opportunities associated with the analyst's argument that new tariffs could solve the U.S. debt problem? Lawrence Gillum of LPL Financial's argument that tariffs could reduce deficits and support the U.S. Treasury market, while theoretically offering a fiscal revenue stream, has broader macroeconomic implications, coupled with significant risks and opportunities: - Risks: Tariffs are essentially consumption taxes, increasing costs for businesses and eventually consumers, potentially exacerbating inflationary pressures and dampening economic growth. This could lead to stagflationary risks, a double blow to corporate earnings and consumer spending. - Opportunities: If tariff revenues genuinely and significantly reduce government borrowing needs, it could decrease Treasury issuance, thereby supporting existing bond prices and containing yields, benefiting fixed-income investors. In a slowing economy, the safe-haven appeal of Treasuries would further intensify. - Geopolitical Impact: Tariff policies typically invite retaliatory measures from trade partners, potentially escalating global trade friction, harming global supply chain efficiency, and ultimately negatively impacting U.S. exporters.