Stocks were falling broadly on Thursday as the latest trickles from Federal Reserve officials suggested a September cut is not guaranteed.
The Dow was down 232 points, or 0.5%. The S&P 500 was down 0.6%. The Nasdaq Composite was off 0.7%.
Odds of a September rate cut were down to 71.5% on Thursday, compared to 82.4% on Wednesday, and 92.1% on Aug. 14, according to the CME FedWatch Tool.
Ahead of Fed Chairman Jerome Powell’s big speech at Jackson Hole Friday morning, Cleveland Fed President Beth Hammack told Yahoo! Fiance that with the current economic data, she “wouldn’t see a case for September cut,” noting the full tariff effect won’t be visible until next year.
“We’re missing on inflation, need to stay laser-focused,” Hammack said, according to Yahoo! Finance.
Wall Street got minutes from the July Federal Open Market Committee meeting on Wednesday, which showed central bankers were divided on how to approach interest rates while balancing risks to the labor market. Many on Wall Street worry tariffs will send inflation spiking in the second half of this year.
After Walmart’s latest earnings disappointed investors Thursday, CEO Doug McMillon said on the firm’s earnings call that as the company replenishes its inventory, tariffs are increasing costs by the week. He added that lower- and middle-income househouses are starting to adjust their shopping habits, in response.
Though the August manufacturing and services purchasing managers’ indexes from S&P Global were ahead of expectations, even that survey included the specter of inflation. Chris Williamson, chief business economist at S&P Global Market Intelligence, said in the release that companies in manufacturing and services have reported stronger demand but are struggling to meet sales growth.
“Companies have consequently passed tariff-related cost increases through to customers in increasing numbers, indicating that inflation pressures are now at their highest for three years,” Williamson says. “The resulting rise in selling prices for goods and services suggests that consumer price inflation will rise further above the Fed’s 2% target in the coming months.”