Stock Markets Are Slumping. Don’t Bet on a Powell Fed Rate-Cut Rescue.

(PATRICK T. FALLON/AFP via Getty Images)

It’s been a rough week for the stock market, and investors are looking to Federal Reserve Chair Jerome Powell to ride to the rescue.

The S&P 500 fell for a fourth consecutive day Wednesday, but at least the tech selloff seemed to halt midway through the day. With that weakness in the rearview mirror, the Fed—and the question of interest-rate cuts—will determine the road ahead for markets.

Traders are still confident of a rate cut coming next month—an 82% probability according to the CME’s FedWatch tool. Though that’s down from 92% a week ago, pointing toward some caution ahead of the Jackson Hole summit hosted by the central bank, which begins this evening.

But the market is more split on whether the Fed will cut two or three times between now and the end of the year.

It’s not just the market that’s torn. The minutes from last month’s monetary policy meeting, released Wednesday, showed a divided committee with differing views on the inflationary impact of tariffs and the strength of the labor market. It’s important to note those discussions took place before July’s weak jobs report.

While that employment data may have swayed more Fed members toward cutting rates, retail earnings this week won’t have done much to clear the fog—painting a mixed picture when it comes to the health of consumers.

There’s added uncertainty too given the pressure President Donald Trump has exerted on the Fed to cut rates. The make up of the committee is also changing—Adriana Kugler stepped down earlier this month, Trump has called for another governor, Lisa Cook, to resign and Powell himself is set to leave next year.

At last year’s economic symposium Powell said the “time has come” to start cutting, signaling a clear pivot in policy.

Oh how the stock market would love to hear that again Friday. Unfortunately Powell may not end up being the knight in shining armor.

— Callum Keown

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Trump Intensifies Fed Attack With Call for Governor’s Resignation

President Donald Trump and his allies in the administration stepped up their pressure campaign on the Federal Reserve, calling on Fed Gov. Lisa Cook to resign after Federal Housing Finance Agency Director Bill Pulte urged Justice Department officials to investigate Cook’s mortgages for potential fraud.

• The president can remove a sitting governor from the Board “for cause,” requiring proof of malfeasance. Policy disagreements don’t count. Trump wants Fed Chair Jerome Powell to cut interest rates, and Cook has never dissented from the majority on monetary policy during her tenure on the Fed’s policy committee.
• In June, Cook said the economy still looked solid, but she did note that the “heightened uncertainty poses risks to both price stability and unemployment.” Two other governors, thought to be contenders to replace Powell, voted to lower rates in July. The Fed wouldn’t comment on the allegations against Cook.
• Late Wednesday, Cook said she would be defending herself against the claims made by Pulte. Trump has been waging a multipronged offensive against the Fed in a bid to remake the independent agency responsible for setting interest-rate policy. Cook said she wouldn’t be bullied to step down.
• Trump gained a foothold earlier this month when Adriana Kugler resigned months before her term was set to expire in January 2026. He nominated economist Stephen Miran, current chair of the White House Council of Economic Advisers and a sharp critic of the Fed, to replace her in a temporary role.

What’s Next: Minutes of the Fed’s July meeting reflect division among Fed policymakers on the inflationary effects of tariffs. Some said they needed more time to assess how trade policies might affect prices, while others said waiting for that clarity wouldn’t be “feasible or appropriate.”

— Megan Leonhardt, Nicole Goodkind, and Shaina Mishkin

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White House’s Push for Intel Stake Has Unintended Consequences

A coordinated White House effort to establish equity stakes in the tech sector, thus encouraging the domestic return of chip-making facilities, would mark a sea-change in U.S. government industrial policy. Even the first step toward that—talk of the government taking a stake in Intel —is having unintended consequences.

• Intel shares have rallied more than 30% this month on the reports, and possible investments from others. Japan’s SoftBank confirmed a $2 billion investment in Intel this week, tied to the issuance of new Intel equity. There’s still no change in Intel’s muted earnings outlook.
• The price of Intel stock has soared to 58 times the per-share earnings it is expected to bring in over 12 months. That is the highest since 2002 and a level that makes for an unattractive entry point for taxpayer funds in a hypercompetitive market.
• Government stakes could make chip makers cooperate through government edict. Already, Nvidia and Advanced Micro Devices pledged to pay 15% of revenue to the U.S. from the sale of chips to the China market. Micron Technology, Global Foundries, and Texas Instruments got Chips Act funds.
• SoftBank’s investment would not only give Intel capital, it could pave the way for Arm Holdings to become a bigger customer of Intel’s foundry business, which makes chips for other companies in the industry.

What’s Next: Melius analyst Ben Reitzes thinks that Intel could become a bargaining chip in trade deals, while potential customers “could consider the benefits of currying favor with the Administration when considering Intel as a foundry customer.”

— Martin Baccardax

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Target’s Next CEO Faces Numerous Turnaround Challenges

Target tapped a longtime insider as CEO charged with turning the retailer’s sagging fortunes around. COO Michael Fiddelke will take over from Brian Cornell on Feb. 1. While investors had been hoping that an external hire would bring a fresh perspective to Target, Fiddelke acknowledges the work ahead.

• Target has suffered from higher prices, skimpy staff, and messy and understocked stores that have pushed loyal shoppers toward competitors like Walmart, Costco Wholesale, and Amazon.com. Annual revenue has declined for two consecutive fiscal years and was on track to notch its third year of decreases.
• Bernstein analyst Zhihan Ma cited its 1.9% same-store sales decline and macroeconomic challenges like higher tariffs, noting that Fiddelke led Target’s omnichannel operations, which underinvested in automation and supply chain capabilities. That makes it hard for the market to support “a turnaround led by a long-tenured insider.”
• Fiddelke’s top goal as CEO is to get Target back to growth, he said, outlining three main priorities: sprucing up merchandise to reclaim style and design leadership; improving the consistency of the in-store experience; and investing in technology across Target’s operations.
• Target’s second-quarter earnings weren’t as bad as feared. Adjusted earnings of $2.05 a share beat estimates. Sales dipped 0.9% from a year ago to $25.2 billion, the 11th straight quarter of flat or falling sales. Target said higher markdowns and tariff costs reduced gross margins.

What’s Next: For the full fiscal year, Target expects a low-single-digit decline in sales and adjusted earnings of $7 to $9 a share. Fiddelke told reporters that he has seen Target at its best and not its best, and knows “where we have work to do.”

— Sabrina Escobar and Janet H. Cho

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Hertz to Sell Cars on Amazon. Carvana, CarGurus Under Threat.

Amazon will start selling used cars from car rental firm Hertz which will be a direct threat to car dealer companies or other platforms. Carvana stock fell 1.7%, and CarGurus retreated 2.2% Wednesday. Cars.com declined 1.6%, while Hertz jumped 6%.

• Cars are already for sale on Amazon. “Amazon Autos” partners with dealers. It appears similar to search tools such as Autotrader.com. Hertz, however, is Amazon’s first fleet customer, according to the press release.
• “Bottom line, we view the news as a negative for both Carvana and CarGurus, but note that Amazon’s expansion into used vehicle sales has been expected for some time,” wrote Gordon Haskett analyst Robert Mollins on Wednesday, noting that Hertz and Carvana have been partners since 2021.
• Amazon has a record of disrupting industries. This past week, shares of Kroger dropped almost 6% in the two days after Amazon said it will expand same-day delivery of groceries.

What’s Next: Investors seem to think Hertz will get better margins on vehicles sold on Amazon. That may be the case, but online distribution platforms for used cars aren’t new or underdeveloped. Car rental companies routinely buy and sell vehicles, so the big question is whether teaming up with Amazon will provide a meaningful boost to Hertz’s earnings.

— Al Root and Brian Swint

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Sony Cites Challenging Economic Times for PlayStation 5 Price Hike

Sony Group is the latest gaming company to raise prices, citing challenging economic times, adding $50 onto PlayStation 5 consoles sold in the U.S. starting today. It didn’t directly blame tariffs, but explained that like other global businesses, “we continue to navigate a challenging economic environment.”

• The move comes after rivals Microsoft raised Xbox console and controller prices in May, and Nintendo boosted its Switch price earlier this month. Sony CFO Lin Tao already said this month that the tariff situation was still fluid, with product-specific tariffs still in flux.
• On top of consoles, companies are raising the prices for videogames. Microsoft said it would adjust the pricing of some of its new first-party games starting this holiday season to $79.99. And Nintendo Switch 2 games like Super Mario Party Jamboree and Mario Kart World go for $79.99.
• Electronic Arts’ first-person military shooter game Battlefield 6 comes out Oct. 10 for $69.99. Battlefield 6 takes aim at Microsoft’s Call of Duty, the best-selling U.S. videogame franchise for 16 years, according to Circana research. A recent beta release of Battlefield drew over 500,000 gamers.
• Separately, Take-Two Interactive Software cut more than 80 jobs, a third of the staff at Cloud Chamber, the studio behind the next BioShock game, Bloomberg reported, after previously firing its studio head and creative director. That is expected to delay BioShock’s release in late 2026 or early 2027.

What’s Next: Wall Street expects EA to sell eight million to 11.5 million Battlefield 6 games, and it could take material market share from Call of Duty this holiday. Former Microsoft Xbox and former Activision Blizzard executive Mike Ybarra expects Battlefield to “boot stomp CoD this year.”

— Angela Palumbo, Tae Kim, and Janet H. Cho

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner