Fed Chair in Focus: Will Powell Signal Rate Cuts Despite Hot Jobs Market?

Stock futures in the US dipped on Tuesday, pulling back from recent record highs. Investors are cautious ahead of a speech by Federal Reserve Chair Jerome Powell later today. Powell's address at a European Central Bank conference might shed light on the Fed's stance on recent economic data hinting at a slowdown and potentially easing inflation.

This comes after a positive Monday for the major indexes. The S&P 500 rose 0.3%, the Dow gained 0.1%, and the Nasdaq Composite closed at a record level, up 0.8%, driven by strong performance in tech stocks.

Several key events are on tap this week that could impact the market. Investors are particularly interested in:

• Powell's Speech: Any hints about the Fed potentially adjusting interest rates in response to the economic data will be closely watched.

• Fed Minutes: Released on Wednesday, these minutes will detail the discussions from the Fed's latest meeting, where they forecast only one rate cut in 2024. However, some Fed officials have expressed concerns about persistent inflation delaying any policy changes.

• Nonfarm Payrolls Report: This report, due Friday, is a crucial indicator of the labor market's health. Despite inflation and high interest rates, the job market remains robust, and how it performs will influence the Fed's decision-making.

Interestingly, despite hawkish signals from the Fed, some traders are betting on a rate cut by September. Data from the CME Fedwatch tool suggests a 59% chance of a 25 basis point reduction.

On the corporate side:

• Paramount Global: Shares rose 4% pre-market on reports that billionaire Barry Diller might be considering a bid for the company.

• Boeing: Stock dipped slightly pre-market after news that the Justice Department might be looking for a plea deal related to the 737 Max crashes.

• Tesla: Shares fell 1.3% pre-market after data showed a significant drop in China-made electric vehicle sales in June.

Oil prices continued their climb on Tuesday, nearing two-month highs, on expectations of increased demand during the summer driving season in the US. The focus remains on gasoline consumption, which is expected to rise as the Independence Day holiday approaches. Additionally, traders are keeping an eye on potential disruptions from Hurricane Beryl and data on US crude stockpiles expected later in the day.