Aug 25 (Reuters) - Wall Street's main indexes were mixed on Monday as investors weighed U.S. Federal Reserve Chair Jerome Powell's hints of a near-term interest-rate cut and looked ahead to AI leader Nvidia's quarterly earnings later in the week.
Markets took a pause from a rally late last week, when Powell hinted that an interest-rate cut could be considered at the central bank's September meeting, citing recent labor market weakness.
The Personal Consumption Expenditures Price index - the Fed's preferred inflation gauge - is due to be released on Friday, while official nonfarm payrolls data is expected next week. The reports will be crucial, especially after Powell said a dovish verdict was not a certainty.
"The focus right now is the labor market," said Brian Klimke, investment director at Cetera Investment Management.
"We have the job market that's rolling over a little bit and the economy is weakening, so the Fed needs to act sooner than later and they're seeing it too."
Powell's comments nudged major brokerages to revise their expectations, with Barclays, BNP Paribas and Deutsche Bank currently seeing a 25-basis-point reduction in borrowing costs next month.
Traders now see an 81.9% chance of a Fed rate cut in September, according to data compiled by LSEG. Remarks from policymakers John Williams and Lorie Logan later in the day will be scrutinized to see if they share Powell's policy outlook.
At 11:46 a.m. ET, the Dow Jones Industrial Average (.DJI), fell 238.55 points, or 0.52%, to 45,393.19, the S&P 500 (.SPX), lost 6.03 points, or 0.09%, to 6,460.88, and the Nasdaq Composite (.IXIC), gained 54.05 points, or 0.25%, to 21,550.58.
Friday's optimism helped the blue-chip Dow close at a record high for the first time since December 2024, and the benchmark S&P 500 logged its strongest daily gain since May.
On Monday, Jefferies became the latest brokerage to raise its year-end target for the S&P 500, at a time when companies have tempered tariff-related forecasts.
Seven of the 11 S&P 500 sub-sectors edged lower. Consumer staples (.SPLRCS), healthcare (.SPXHC), and utilities (.SPLRCU), - often traded as bond proxies - fell about 1% each as yields on Treasury bonds edged higher.
Traders are awaiting AI darling Nvidia's (NVDA.O), earnings on Wednesday to see if its $4 trillion valuation is justified.
The potential impact on Nvidia's forecasts from its recent revenue-sharing deal with the U.S. government will be closely watched. The chip major's shares edged up 1.8%, boosting the broader tech sector (.SPLRCT), opens new tab.
In deals-related moves, beverage company Keurig Dr Pepper (KDP.O), slid 7.7% after saying it would buy JDE Peet's (JDEP.AS), for $18.4 billion in cash.
Furniture retailers RH (RH.N), and Wayfair (W.N), declined about 5% each after U.S. President Donald Trump said on Friday his administration would investigate furniture import tariffs.
Intel (INTC.O), inched up 1.1% after Trump said the U.S. government was taking a stake in the chipmaker. He also said he would make other deals similar to the one with Intel.
Declining issues outnumbered advancers by a 1.78-to-1 ratio on the NYSE and declining issues outnumbered advancers by a 1.54-to-1 ratio on the Nasdaq.
The S&P 500 posted 13 new 52-week highs and no new lows, while the Nasdaq Composite recorded 103 new highs and 24 new lows.
Reporting by Johann M Cherian and Sanchayaita Roy in Bengaluru; Editing by Pooja Desai
