A look at the day ahead in U.S. and global markets by Samuel

Indyk

The relentless recovery in the S&P 500 from early August's

post-payrolls trough finally took a pause on Tuesday after eight

straight up days, and futures are not giving too much indication

about the direction of travel on Wednesday.

The benchmark U.S. index fell 0.2%, hardly a dramatic

fall, but a fall nonetheless. It was the index's first down day

since Aug. 7.

S&P futures are hovering around unchanged on

Wednesday, as are those on the Nasdaq and Dow Jones

.

The waning upside momentum arrives as markets turn their

attention to U.S. jobs data, this time benchmark revisions to

non-farm payrolls, which could show a weaker labor market than

previously thought.

But, as Deutsche Bank notes, the revisions only affect

numbers up to the March payrolls and do not cover job gains

since.

Remember, it was July's weak jobs report that helped send

global equities into a tailspin on fears that the U.S. economy

was heading for a recession.

Markets moved rapidly to price in a faster pace of easing

from the Fed this year and still see almost 100 bps of rate cuts

by the end of 2024.

With only three meetings left, that implies two

quarter-point cuts and one 50 bps move, a much more aggressive

pace than expected at the start of the month.

In contrast, a slim majority of economists polled by Reuters

believe the Fed will cut rates by 25 bps at each of the three

meetings left this year, while only 11% of those surveyed

expected the Fed to cut by 100 bps or more.

Clues about the path of interest rates could come later as

the Fed releases the minutes from its July meeting, when rates

were held steady at 5.25%-5.5%.

Policymakers have largely kept quiet on whether an outsized

move could be possible, but in an interview with the Associated

Press on Monday, Atlanta Fed President Raphael Bostic appeared

to prepare markets for a more aggressive rate path lower.

"Evidence of accelerating weakness in labor markets may

warrant a more rapid move, either in terms of the increments of

movement or the speed at which we try to get back," Bostic said

on Monday, referencing the level of rates that would not be

restrictive.

Fed Chair Jerome Powell will be able to give his view on

where rates are heading on Friday when he speaks at the Kansas

City Fed's annual central bank get-together at Jackson Hole,

Wyoming.

As inflation cools and the labor market looks rocky, Powell

might use his platform to signal markets are right about how

quickly borrowing costs can be lowered.

For now, markets are in wait-and-see mode. European shares

are up slightly, the dollar is rising a touch

but only after falling to its lowest level since January earlier

in the day. Benchmark Treasury yields are little

changed.

Key developments that should provide more direction to U.S.

markets later on Wednesday:

* U.S. nonfarm payrolls benchmark revisions

* FOMC minutes

* U.S. to sell $16 billion of 20-year bonds

* Earnings from Target, Analog Devices, TJX