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Indexes down: Dow 0.26%, S&P 500 0.20%, Nasdaq 0.18%

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Keurig Dr Pepper ( KDP ) slides after deal to buy Dutch JDE Peet's

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Furniture retailers drop as Trump threatens tariff inquiry

(Updates to after markets open)

By Johann M Cherian and Sanchayaita Roy

Aug 25 (Reuters) - Wall Street's main indexes dipped on

Monday, retreating from gains made in the previous session after

U.S. Federal Reserve Chair Jerome Powell hinted that an

interest-rate cut could be considered at next month's central

bank meeting.

Recent economic data suggesting labor market weakness has

boosted investor confidence that the central bank could switch

to a dovish stance in September, despite a majority of

policymakers warning that U.S. tariffs could add to inflationary

pressures in the coming months.

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 most important report between now and September is not

the inflation numbers, rather the jobs report," said Thomas

Hayes, chairman at Great Hill Capital, New York.

"As long as we show continued cracks in the labor market,

the cut in September will happen, barring some egregiously high

inflation numbers."

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 a 79.6% chance of a Fed rate cut in

September, according to data compiled by LSEG.

At 09:56 a.m. ET, the Dow Jones Industrial Average

fell 117.50 points, or 0.26%, to 45,514.24, the S&P 500

lost 13.20 points, or 0.20%, to 6,453.71, and the Nasdaq

Composite lost 40.29 points, or 0.18%, to 21,457.09.

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 log 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.

Ten of the 11 S&P 500 sub-sectors edged lower, with consumer

discretionary leading losses with a 0.5% drop.

Traders are awaiting AI darling Nvidia's ( NVDA ) earnings

on Wednesday to see if its $4 trillion valuation is justified.

The potential impact on Nvidia's ( NVDA ) forecasts from its

recent revenue-sharing deal with the U.S. government will be

closely watched. The chip major's shares were flat in early

trading.

In deals-related moves, beverage company Keurig Dr Pepper ( KDP )

slid 8% after saying it would buy JDE Peet's

for $18.4 billion in cash.

Furniture retailers RH and Wayfair ( W ) declined

about 7% each after U.S. President Donald

Trump

said on Friday his administration would conduct a tariff

investigation on furniture imports.

Intel ( INTC ) dipped after Trump said the U.S.

government was taking a stake in the chipmaker, which the

company said could limit its international sales and future

government grants.

Trump also said that he would make more

deals

similar to the one with Intel ( INTC ).

Remarks from New York Fed President John Williams, later in

the day will be scrutinized to see if he shares Powell's policy

outlook.

Declining issues outnumbered advancers by a 1.72-to-1 ratio

on the NYSE and by a 1.75-to-1 ratio on the Nasdaq.

The S&P 500 posted seven new 52-week highs and no new

lows, while the Nasdaq Composite recorded 59 new highs and 13

new lows.