Pre-Market | Fed Signals Rate Cuts as Markets React to Earnings Surprises

25 Aug., DOW FUTURES down 0.21% in pre-market, NASDAQ FUTURES down 0.29% in pre-market, S&P FUTURES down 0.23% in pre-market. Fed Chair Powell signaled likely rate cuts at Jackson Hole, citing employment downside risks and reaffirming a 2% inflation target. US August Markit PMI composite rose to 55.4, a nine-month high, driven by strong manufacturing growth. CME FedWatch indicates a high probability (84.1%) for a September rate cut.

In pre-market trading, PDD Holdings surged by 6.13% as the company's second-quarter earnings exceeded market expectations. Meanwhile, BABA rose by 3.30% on the back of positive analyst reports and an increased price target from Morgan Stanley. Conversely, Strategy saw a decline of 3.88% due to a negative analyst note that triggered investor sell-offs. British American Tobacco also experienced a drop of 2.44% after Invesco decreased its holdings in the company.

In pre-market trading, ESSA Pharma surged over 260% following the release of positive earnings. Sharps Technology also saw a significant rise, up nearly 75%, after securing over $400 million in private placement funding for its digital asset strategy. ModivCare experienced a sharp decline, dropping nearly 49%. Zentalis also faced a setback, down over 18%, as its earnings report missed analyst estimates.

Fed Chairman Powell signaled potential rate cuts in recent remarks, emphasizing downside risks to employment and reduced inflation risks, while shifting the policy framework to a simple 2% inflation target. U.S. PMI data improved, with the composite index rising to a nine-month high of 55.4 and manufacturing climbing to its highest level since May 2022 at 53.3, although services dipped to a two-month low of 55.4. Markets now price in an 84.1% probability of a 25 basis points rate cut in September.