Markets on Edge Ahead of Jackson Hole: Fed Signals Temper Dovish Bets
Today’s Market Analysis
By Ahmad Assiri, Research Strategist – Pepperstone
US equities closed modestly lower on Wednesday, with sentiment dampened by the latest FOMC minutes that leaned less dovish than markets had anticipated. The S&P 500 slipped 0.2%, while the Nasdaq 100 underperformed with a 0.6% decline. Risk appetite remains fragile, as investors reassess expectations that the Federal Reserve will pivot to policy easing in the near term.
In rates, the 10-year Treasury yield held around 4.30%, while the 30-year yield edged near 4.88%, showing a slight flattening of the curve as momentum behind the “risk-on” narrative continues to fade. Fed officials reiterated that inflation remains the primary concern, suggesting that policy adjustments will be highly data-dependent, particularly as the labor market shows signs of cooling but not enough to dominate the inflation story.
Markets are currently pricing in an 80% probability of a September rate cut, with a second move still expected before year-end. However, conviction around this path will depend heavily on upcoming labor market prints and CPI data, both of which land before the next FOMC meeting.
Equities: Consolidation, Not Capitulation
Losses were concentrated in megacap tech names, with Apple, Tesla, Microsoft, and Amazon all finishing in the red. The selling appeared more like profit-taking than a fundamental revaluation, pointing to a cooling-off phase rather than an outright shift in sentiment.
On the corporate side, Target delivered Q2 revenue of $25.2 billion with EPS of $2.05, both beating analyst estimates. Comparable sales, however, fell 1.9%, underscoring ongoing consumer pressure. Shares dropped nearly 6% in after-hours trading following news that longtime CEO Brian Cornell will step aside in 2026, with insider Michael Fiddelke tapped as his successor. While the choice reflects continuity, investors were hoping for a more transformative external hire to reenergize growth amid intensifying retail competition.
Looking ahead, Nvidia’s Q2 earnings next week represent the most consequential release of the season. As the bellwether for AI-related investment, Nvidia’s performance will likely set the tone for broader equity sentiment, particularly in the tech sector where AI continues to dominate positioning narratives.
Commodities & FX
In energy, Brent crude traded tightly between $84–85 per barrel, with price action reflecting equilibrium between resilient demand and ongoing supply constraints. After months of volatility, oil appears to be consolidating into a fundamentals-driven range.
The US dollar index (DXY) hovered near 104, reflecting market indecision ahead of Fed Chair Powell’s remarks at the Jackson Hole Symposium. Positioning remains muted, as traders await stronger signals before committing to directional bets.
Meanwhile, gold stabilized near $2,420 per ounce, rebounding from recent support around $2,390. Persistent macro uncertainty and rate path ambiguity continue to underpin demand for the metal as a strategic hedge.
What’s Next
Markets will turn their attention to preliminary PMI surveys for the US, Eurozone, and UK later today, providing a fresh read on business activity momentum. US jobless claims and existing home sales data are also on deck. However, the spotlight is firmly on Jackson Hole, where Fed Chair Powell’s guidance on the inflation–growth trade-off could influence the trajectory of yields and reset expectations around the timing of Fed easing.
