Wall Street Update: Fed Rate Cut Anticipation Rises As US Equities Decline After Weak Jobs Report

(MENAFN- DailyFX (IG)) US equities decline amid rate cut expectations

Unietd States (US) equity markets finished lower on Friday, despite a weaker-than-expected August jobs report that nearly guarantees the Federal Reserve (Fed) will resume its rate-cutting cycle in ten days.

Non-farm payrolls rose by just 22,000 in August, well below the upwardly revised 79,000 in July and market forecasts of 75,000. The unemployment rate increased to 4.3% in August from 4.2%, in line with expectations, marking the highest rate since October 2021.

Potential for aggressive Fed rate cuts

The softer jobs numbers observed over the last week make a 25 basis point (bp) cut from the Fed seem almost certain at the 17 September Federal Open Market Committee (FOMC) meeting. However, if this week's Bureau of Labor Statistics (BLS) labour market revision reaches or exceeds the top end of the whisper range - between 650,000 and 900,000 - calls for a 50 bp cut will likely intensify.

Regardless of whether the Fed initiates with a 25 bp or a 50 bp cut in September, after the Fed's dovish pivot at Jackson Hole - where the risk of a labour market slowdown was highlighted as a more significant concern than persistent inflation - the expectation is for a more aggressive series of Fed rate cuts into 2026.

To that end, the US interest rate market is pricing in about 68 bp of Fed rate cuts by year-end. A cumulative 150 bp of Fed rate cuts is priced between now and December 2026.

Upcoming economic updates

Looking ahead, aside from Tuesday night's BLS labour market revisions, the key event on this week's US data calendar is Thursday night's consumer price index (CPI) report, previewed below.

US CPI

Date: Thursday, 11 September at 10.30pm AEST

For July, headline inflation in the US increased by 0.2%, in line with expectations. This saw the annual rate of headline inflation remain at 2.7% in July, unchanged from June, and below the forecast of 2.8%.

The annual core CPI, which excludes volatile items like food and energy, rose by 0.3%, pushing the annual core inflation rate up to 3.1%, the highest in five months and further away from the Fed's 2% inflation target.

For August, the expectation is for the annual headline inflation rate to rise to 2.9%, which would be its highest reading since January, and for the core measure to remain at 3.1% year-over-year (YoY).

Nonetheless, as noted above after the Fed's dovish pivot at Jackson Hole, the expected uptick in headline inflation is unlikely to prevent the Fed from cutting rates at its meeting on 17 September.

US core inflation chart

Source: TradingEconomics Source: TradingEconomics Nasdaq 100 technical analysis

Last week's rally in the US Tech 100 (Nasdaq 100) saw it rebound towards weekly trend channel resistance , currently just above 24,000, leaving things finely balanced at the start of the new week.

Should the Nasdaq 100 break above the 23,969 record high and then see a sustained break above trend channel resistance at 24,000 - 24,100, it would indicate the Wave IV correction is complete and that the uptrend has resumed with scope for a Wave V towards 25,000.

Conversely, if the Nasdaq 100 starts the week on the backfoot and falls below support at 22,959 coming from the 20 August low and then below the 22,673 low from 1 August, it would greatly increase the likelihood that a deeper Wave IV pullback towards 22,200 - 22,000 is underway.

Nasdaq 100 daily chart Source: TradingView Source: TradingView S&P 500 technical analysis

The US 500 (S&P 500) last week hit a fresh record high of 6532, in the area of weekly trend channel resistance, negating the 'loss of momentum' type weekly candle from the previous week.

Should the S&P 500 break above the 6532 record high and then see a sustained break above trend channel resistance at 6540 - 6550, it would indicate the Wave IV correction is complete and that the uptrend has resumed, with scope towards 6700.

Conversely, if the S&P 500 starts the week on the backfoot and falls below support at 6360 - 6340, coming from recent lows, it would greatly increase the likelihood of a deeper Wave IV pullback towards 6200 - 6100.

S&P 500 daily chart Source: TradingView Source: TradingView

• Source: TradingView. The figures stated are as of 8 September 2025 . Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

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