(Reuters) -U.S. stock index futures slipped on Monday, pausing after strong gains in the previous session, when Federal Reserve Chair Jerome Powell hinted that an interest-rate cut could be on the table at the central bank's meeting next month.
Recent data suggests heightened risks to labor market health and a majority of Fed officials have said U.S. tariffs were likely to add to inflationary pressures in the coming months.
The Personal Consumption Expenditures Price index - the U.S. Federal Reserve's
preferred inflation gauge - is due to be released on Friday, while official nonfarm payrolls data is expected next week. The reports will be key, especially after Powell warned that a dovish verdict was not a certainty.
"There are persistent concerns about tariff-related inflation and how that may evolve in the coming months. But the reality is that recent tariff-driven price pressures are viewed as transitory and inflation expectations are quite stable," said David Chao, a global market strategist at Invesco.
"These well-anchored inflation expectations suggest that the Fed should be working to offset any weakness in the U.S. economy."
Powell's comments nudged major brokerages to revise their expectations, with Barclays, BNP Paribas and Deutsche Bank now seeing a 25-basis-point rate cut next month.
Traders have also bumped up bets on a September reduction to 84.2%, according to data compiled by LSEG.
At 05:40 a.m. ET, Dow E-minis were down 87 points, or 0.19%, S&P 500 E-minis fell 14.25 points, or 0.22%, and Nasdaq 100 E-minis lost 74.5 points, or 0.32%.
Friday's optimism helped the blue-chip Dow close at a record high for the first time since December, while Jefferies became the latest brokerage to raise its year-end target for the benchmark S&P 500 at a time when companies have tempered tariff-related forecasts.
This week is also crucial for the AI sensation that has powered Wall Street highs. Traders are gearing up for Nvidia's results on Wednesday to justify its $4 trillion valuation. The chip giant's shares rose marginally in premarket trading.
The potential impact of Nvidia's recent revenue-sharing deal with the U.S. government on its forecasts will be closely watched.
In deals-related moves, beverage company Keurig Dr Pepper slid 3% after it said it would buy JDE Peet's for $18.4 billion in cash. The Dutch coffee company's shares jumped 17.3% in European trading.
Verint Systems jumped 22.8% after a report said private equity firm Thoma Bravo would acquire the call center software maker for about $2 billion, including debt.
Intel rose 3.1% after U.S. President Donald Trump said the government was taking a 9.9% stake in the chipmaker for $8.9 billion.
Remarks from New York Fed John Williams, a Federal Open Market Committee voting member, are due later in the day and will be scrutinized to see if he shares Powell's outlook on policy.
(Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai)
