(Bloomberg) — Bond yields climbed and stocks fell, with traders betting Jerome Powell will throw cold water on market expectations for aggressive rate cuts this yr.

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Treasury yields rose across the curve, with the move led by shorter maturities. The dollar also gained. The S&P 500 lost steam after getting near its all-time high, with tech megacaps selling off. The swap market has cemented bets the Federal Reserve will ease policy by one percentage point by year-end, starting in September with the likelihood of a 25- and even 50-basis-point cut.

“Will Powell allude to a slow walk down the monetary policy stairs or a speedy elevator ride all the way down to the basement?” said Jose Torres at Interactive Brokers. “Powell is prone to select the stairwell quite than the elevator.”

Wall Street traders waded through a raft of remarks from US policymakers, with Federal Reserve Bank of Kansas City President Jeffrey Schmid saying he desires to see more data before supporting cuts. His Boston counterpart Susan Collins says “a gradual, methodical pace” is prone to be appropriate. Her comments were echoed by Philadelphia Fed President Patrick Harker in a CNBC interview.

“The script is obvious — the Fed goes to ease in September, but nobody is portraying a desire to lift 50 basis points presently,” said Andrew Brenner at NatAlliance Securities.

Traders are overplaying the prospects of an aggressive series of Fed cuts before the tip of the yr, based on Mohamed El-Erian.

“It’s problematic in my mind that the market is pricing in so many rate cuts at once,” El-Erian, the president of Queens’ College, Cambridge, told Bloomberg Television on Thursday. “The market is overdoing it.”

Treasury 10-year yields advanced six basis points to three.86%. The S&P 500 dropped below 5,600. The Nasdaq 100 fell 1.5%.

“We are actually once more not debating if they are going to cut — but by how much they are going to cut and the way again and again they are going to cut before yr end,” said Kenny Polcari at SlateStone Wealth. “I’m within the 25 basis-point and three-times camp. The US economy will not be circling the drain – so there is no such thing as a must suggest that it’s.”

Chris Senyek at Wolfe Research says his sense is that Powell will signal an easing cycle starting in September. Nonetheless, contrary to what the market is pricing in for the rest of 2024, he doesn’t consider the Fed Chair will signal a cut larger than 25 basis points.

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Sam Stovall at CFRA also bets the following Fed-easing cycle can be initiated in a “more measured fashion” with a 25 basis-point cut.

“This ‘slower to lower’ approach will likely be intended to signal that the Fed will not be behind the curve, but will allow it to be sure that the embers of inflation have been fully extinguished before concluding that its mission has been accomplished,” he noted.

Minutes from the central bank’s July 30-31 policy meeting released this week revealed that “several” Fed officials saw a plausible case for cutting rates last month while a “overwhelming majority” thought it might be appropriate to start easing at their next gathering on Sept. 17-18.

On the economic front, the most recent figures were more of a “mixed bag.”

Data showed jobless claims data showed the labor market is cooling only step by step — quite than rapidly slowing. US manufacturing activity shrank on the fastest pace this yr on further weakness in production, orders and factory employment. And existing-home sales increased for the primary time in five months.

“The US economy overall has, so far, been robust enough to take an prolonged Fed rate pause,” said Don Rissmiller at Strategas. “But there’s a transparent case for rate cuts soon.”

Corporate Highlights:

• Peloton Interactive Inc. surged after the fitness company reported earnings that beat estimates, signaling that turnaround efforts are beginning to bear fruit.

• Snowflake Inc. gave a sales outlook that did not reassure investors that the corporate will gain ground out there for artificial intelligence software tools. The shares fell in prolonged traded.

• Urban Outfitters Inc., the Anthropologie and Free People brands, posted quarterly sales growth that got here in below Wall Street’s expectations.

• Carlyle Group Inc. is acquiring Advance Auto Parts Inc.’s Worldpac unit for $1.5 billion, striking the primary major industrial investment for the firm in greater than two years.

• Zoom Video Communications Inc. gave a sales forecast for the present quarter that beat analysts’ estimates, suggesting its expanded suite of products is making gains with business customers.

• Starboard Value LP urged Autodesk Inc.’s board to judge whether Chief Executive Officer Andrew Anagnost is the fitting person to guide the corporate following recent accounting issues.

Key events this week:

• Japan CPI, Friday

• BOJ’s Kazuo Ueda to attend special session at Japan’s parliament to debate July hike, Friday

• US recent home sales, Friday

• Jerome Powell speaks in Jackson Hole, Friday

A number of the major moves in markets:

Stocks

• The S&P 500 fell 0.7% as of two:21 p.m. Latest York time

• The Nasdaq 100 fell 1.3%

• The Dow Jones Industrial Average fell 0.5%

• The MSCI World Index fell 0.5%

• Bloomberg Magnificent 7 Total Return Index fell 1.9%

• The Russell 2000 Index fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%

• The euro fell 0.4% to $1.1107

• The British pound was little modified at $1.3089

• The Japanese yen fell 0.8% to 146.31 per dollar

Cryptocurrencies

• Bitcoin fell 1.1% to $60,546.77

• Ether fell 0.6% to $2,616.78

Bonds

• The yield on 10-year Treasuries advanced six basis points to three.86%

• Germany’s 10-year yield advanced five basis points to 2.24%

• Britain’s 10-year yield advanced seven basis points to three.96%

Commodities

• West Texas Intermediate crude rose 1.8% to $73.26 a barrel

• Spot gold fell 1.1% to $2,484.23 an oz.

This story was produced with the help of Bloomberg Automation.

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