US stocks were broadly steady on Monday after posting their best week in a year, as investors began counting down to a speech by Fed Chair Jerome Powell at Jackson Hole that could reset rate-cut expectations.
S&P 500 future (ES=F) traded flat but held near record highs, while Dow Jones Industrial Average futures (YM=F) also wavered around the flatline. Contracts on the tech-heavy Nasdaq 100 (NQ=F) slipped 0.1%.
Stocks are set to consolidate last week's strong gains as a measure of calm returns to a market previously whipsawed by worries about a potential recession. Last week's rally recouped the losses stacked up in an early August sell-off as Wall Street fretted about cracks in the economy — concerns that have since been eased by encouraging inflation and consumer spending data.
Focus is already turning to Powell's speech at the central bank's Jackson Hole symposium on Friday, in a quiet week for economic data. As confidence in a "soft landing" for the economy grows — Goldman Sachs now sees a lower likelihood of recession — the question for investors isn't whether the Fed will lower interest rates in September, but by how much.
As of Monday morning, traders are pricing in a 72% chance the Fed will reduce rates by 0.25% at that meeting, and 28% odds for a 0.50% cut, according to the CME FedWatch tool. But the release on Wednesday of minutes from the Fed's July meeting could sway those bets.
Meanwhile, investors will also keep a watchful eye on the Democratic National Convention kicking off on Monday, which could bring more insight what to expect from presidential nominee Kamala Harris.