What Powell’s dovish pivot means for US equity markets

Powell's unexpected shift at Jackson Hole

United States (US) stock markets surged on Friday following Federal Reserve (Fed) Chair Jerome Powell’s dovish pivot during his Jackson Hole symposium speech, potentially paving the way for a interest rate cut at the September Federal Open Market Committee (FOMC) meeting.

This shift arrived just days after the release of the hawkish July FOMC minutes, which had highlighted upside inflation risks. At Jackson Hole, Powell noted that the 'balance of risks' has tilted towards labour market softness rather than persistent inflation, suggesting that this 'may warrant adjusting our policy stance'.

Impact of upcoming labour market data

Although not as dramatic as Powell's December 2018 pivot, akin to a double backflip with a full twist, Powell's latest pivot is nonetheless notable. It puts intense focus on the upcoming events:

• Payrolls report due on Friday, 5 September 2025
• Bureau of Labor Statistics (BLS) labour market revisions due on Tuesday, 9 September2025
• FOMC meeting on Wednesday, 17 September 2025

The BLS revisions could result in a substantial downward adjustment of 550,000 to 950,000 jobs for the 12 months through March 2025. Combined with the September payroll report, these two key events will likely influence the pace and extent of Fed rate cuts. If both reports are weaker than expected, there is a high likelihood that the Fed's rate-cutting cycle could be completed by the time the new Fed chair takes office.

Market anticipation of Nvidia's earnings

In the meantime, NVIDIA's earnings report, scheduled for release after Wall Street closes on Wednesday (Thursday morning Sydney time), will be closely watched, along with Thursday night's initial jobless claims. Last week, these claims spiked to 235,000, while continuing claims reached their highest level since late 2021.

Rounding out the week will be the Fed's preferred measure of inflation, the core personal consumption expenditures (PCE) index previewed below. A higher-than-expected print could test the Fed's newly adopted dovish stance.

US core PCE price index

Date: Friday, August 29 at 10.30pm AEST

For June, the core PCE index rose by 0.3% month-on-month (MoM) for its biggest rise in four months. This saw the annual rate of core PCE inflation rise to 2.8%, above expectations of 2.7%.

For July, the core PCE price index is expected to rise by 0.3% MoM, pushing the annual rate higher to 2.9% - further away from its 2.6% low in April and the Fed's 2% target - as the inflationary impact of previous tariffs becomes more apparent.

The US rates market starts the week pricing in an 80% chance of a 25 basis points (bp) rate cut at the September FOMC meeting, and a cumulative 48 bp of Fed rate cuts priced between now and year end.

Nasdaq 100 technical analysis

Following Friday’s rebound in the US Tech 100 (Nasdaq 100), there is a risk that the Wave IV pullback ended at last Wednesday's 22,959 low.

If the Nasdaq 100 holds above last week’s 22,959 low and the early August 22,673 low, allow for a retest of the mid-August 23,969 high, with a break above here and then above weekly trendline resistance currently at approximately 24,000 indicating that Wave V higher has commenced towards 24,750.

While the Nasdaq 100 remains below 24,000, there remains the possibility that the Wave IV pullback is playing out.

Nasdaq 100 daily chart

S&P 500 technical analysis

Following Friday’s rebound in the US 500 (S&P 500), there is a risk that the Wave IV pullback ended at last Wednesday's 6343 low.

If the S&P 500 holds above last week’s 6343 low and the early August 6212 low, allow for a retest of the mid-August 6481 high, with a sustained break above 6480 - 6500 indicating that Wave V higher has commenced towards 6600.

While the S&P 500 remains below 6480 - 6500, there remains the possibility that the Wave IV pullback is playing out.

S&P 500 daily chart

• _{Source: TradingView. The figures stated are as of 25 August 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.}