Your Capital Markets Snapshot: Markets Reacted Positively Following News of a Potential Fed Pivot

Last week, markets reacted positively following the Federal Reserve’s annual Jackson Hole symposium, where Chair Jerome Powell signaled a change in monetary policy may be necessary. Markets reacted with rising expectations of a rate cut at the September meeting. This dovish tone sparked a strong Friday rally, lifting the S&P 500 to a modest weekly gain despite sliding for five consecutive days prior. Under the surface, market leadership rotated from mega-cap tech stocks to cyclical and value sectors. Bond yields fell across the curve as expectations for a September rate cut climbed to nearly 90%, and futures markets priced in two cuts this year. Economic data was mixed: PMI readings surprised to the upside, while jobless claims ticked higher. Retail earnings from Walmart, Target, and Lowe’s highlighted resilient consumer spending despite tariff-related cost pressures. Overall, markets appear optimistic, supported by a potential Fed pivot and broadening equity participation, though volatility risks remain as inflation and labor trends evolve.