### Dow and S&P 500 Slip as Powell Hints at Cautious Rate Cuts

U.S. stock markets experienced some turbulence on Monday, with indices bogged down as Federal Reserve Chair Jerome Powell signaled a more gradual approach to future interest rate cuts. This cautious stance comes despite overall hikes in monthly and quarterly gains.

In a speech before the National Association for Business Economics in Nashville, Tenn., Powell emphasized that the Federal Reserve is committed to maintaining economic stability. "Overall, the economy is in solid shape; we intend to use our tools to keep it there," Powell underscored. His comments arrive right before the important monthly jobs report, making investors slightly antsy.

During the afternoon trading session, the S&P 500 dipped by 0.5%, while the Nasdaq Composite dropped 0.6%. The Dow Jones Industrial Average fared the worst, declining by 0.8%. Despite this pullback, Wall Street indices still eyed gains for the month, overcoming September’s historical reputation as a difficult month for stocks.

Investor sentiment has recently been lifted by the Federal Reserve's significant interest rate cut and signs of resilience within the U.S. economy, contributing to three consecutive weeks of stock gains. However, profit-taking and rebalancing activities on the last trading day of September and the quarter also weighed down on the indices.

As the markets brace for the September jobs report, due on Friday, questions persist about the actual pace at which the labor market is decelerating. Analysts are keenly observing whether the Fed's aggressive measures are steps to protect a robust economy or to support a weakening one. Powell's remarks have somewhat diminished expectations for another significant rate cut, with market bets for a half-percent cut decreasing from 53% to 35%, according to the CME FedWatch tool.

The mood on Wall Street was further dampened by a series of profit warnings from automakers. Stellantis saw its shares tumble 13% after downgrading its margin outlook, blaming supply chain issues and weakness in China. General Motors and Ford both saw their stocks dip around 4%, while Aston Martin’s shares plunged over 20% following an earnings warning.

International markets showed mixed performances; China’s benchmark stock index posted its largest gain since 2008, entering a bull market as traders acted ahead of a weeklong holiday. Conversely, Japan's Nikkei 225 dropped following an unexpected vote that wrong-footed investors banking on a more easing-friendly prime minister.

Investors are also watching labor market data, with the September jobs report expected to reveal 130,000 added jobs and an unemployment rate remaining steady at 4.2%. Analysts note that positive data could propel equities higher, with stronger-than-expected employment figures likely supporting the ongoing stock rally.

In other notable movements, Chevron's stock rose nearly 0.6% after the Federal Trade Commission approved its $53 billion purchase of Hess Corp, although CEO John Hess will not be allowed to join Chevron’s board.

Overall, it’s clear that this week’s economic data and ensuing market reactions will be critical in shaping investor sentiment and Federal Reserve policy direction in the near term.