Wall Street Braces for a Volatile Week

US stock futures declined on Monday, signaling that March's market volatility is likely to continue as investors turn their attention to the Federal Reserve's policy meeting. With the S&P 500 entering correction territory and the Dow Jones posting its worst week since March 2023, economic concerns and uncertainty surrounding President Trump's tariff policies are keeping markets on edge. This week, investors will closely monitor the Fed's interest rate decision and economic projections for clues about the future.

S&P 500 futures (ES=F) dropped 0.6%, while Dow Jones Industrial Average futures (YM=F) and Nasdaq 100 futures (NQ=F) fell 0.6% and 0.7%, respectively. Last week, the S&P 500 slid nearly 2.3%, the Dow lost over 1,300 points (3%), and the Nasdaq Composite (^IXIC) fell 2.4%, with the S&P 500 officially entering correction territory after a 10% drop from its February 19 peak. Investors are now focused on the Federal Reserve's upcoming decision and Chair Jerome Powell's guidance on the economy.

The Fed is widely expected to hold interest rates steady, but the release of the updated "dot plot" will be crucial. This projection outlines policymakers' expectations for future rate changes. In December, the median forecast suggested two 25-basis point cuts in 2025, one fewer than market predictions. Analysts will be listening closely to Powell's commentary for any hints on future policy shifts amid inflation concerns and the impact of Trump's trade policies.

February's retail sales report, set for release on Monday, is also under scrutiny. Economists expect a 0.6% rebound following January's 0.9% decline. This data arrives as the University of Michigan's consumer sentiment survey reveals growing concerns about the economy, with a reading of 57.9—well below the expected 63. These indicators provide insight into consumer confidence and spending, which are critical to assessing economic health.

In the corporate sector, major earnings reports from Nike (NKE), FedEx (FDX), and others are expected this week. Additionally, Nvidia's (NVDA) annual GTC conference could bring significant developments for the AI industry, with the potential to move tech stocks. Despite last week's sell-off, markets rebounded on Friday as fears of a government shutdown eased. The S&P 500 gained over 2.1%, the Nasdaq climbed 2.6%, and the Dow added more than 600 points (1.6%).

Michael Gapen, Morgan Stanley's chief US economist, expects the Fed to maintain a patient stance. He anticipates Powell will strike a cautiously optimistic tone while acknowledging the uncertainty stemming from fiscal policies. Meanwhile, rising gold prices (GC=F)—which broke $3,000 an ounce—reflect investors' concerns about economic damage from ongoing trade disputes. Trump's firm stance on tariffs adds to these uncertainties, with no sign of easing tensions.

As the Federal Reserve meeting approaches, investors remain on high alert for signals about future rate moves and the broader economic outlook. Monday's retail sales data and corporate earnings reports will offer additional insights into consumer strength and business performance. While the Fed is expected to keep rates steady, Powell's post-meeting remarks will be carefully analyzed for any indication of policy changes. With economic uncertainty and trade tensions looming, markets are bracing for continued volatility in the weeks ahead.