Futures Pull Back After a Historic Week
Stock futures for the Dow Jones, S&P 500, and Nasdaq saw slight declines as markets open this week, following a rally that brought all three indexes to fresh record highs last Friday. Investors are digesting the positives—chief among them the Federal Reserve’s rate cut and strong performance in technology stocks—while preparing for new catalysts that could tip sentiment.

Monetary Policy Reverberations and Market Sentiment
The Fed lowered short-term interest rates by a quarter point last week, a move broadly anticipated and welcomed by markets. Analysts interpret this as a signal that additional easing may come before year-end. That expectation has played a key role in pushing valuations higher, especially in growth and tech-oriented sectors. However, because rate cuts were widely priced in, the scope for further upside from policy alone seems limited unless backed by strong macroeconomic data.

Tech Strength and Small Caps Lead, But Selectively
Technology names and smaller companies powered much of the recent upside, with Intel soaring nearly 23% following a landmark investment deal with Nvidia. The Russell 2000 index—often sensitive to interest rates and broader economic conditions—also hit a fresh high, highlighting renewed confidence among investors willing to spread exposure beyond mega-cap leaders. Still, with futures edging lower after the record closes, signs of profit-taking and cautious positioning are beginning to emerge.

Watchpoints: What Could Shake Markets Next
Investors now turn their attention to several upcoming data points and political developments. The U.S. Bureau of Economic Analysis is set to release the August Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge. At the same time, the looming risk of a U.S. government shutdown if Congress fails to approve funding by September 30 adds another layer of uncertainty.

A modest pullback from recent highs is likely to be viewed as healthy consolidation rather than a reversal, especially given robust earnings potential in tech and resilient economic indicators. Yet, any unexpected inflation surprises or hawkish central bank rhetoric could quickly reintroduce volatility into markets.