On the last trading day of August, major U.S. stock indices experienced a slight pullback due to underperformance in tech stocks. However, for the entire month, the Dow Jones rose by 3.20%, the S&P 500 increased by 1.91%, and the Nasdaq gained 1.58%, with all three indices achieving consecutive monthly gains.
Looking ahead to this week, on September 1st (Monday), the U.S. stock market will be closed for the Labor Day holiday. On the evening of September 5th (Friday) Beijing time, the U.S. Department of Labor will release the August non-farm payroll data, which may once again become a key factor influencing market trends and expectations for a Federal Reserve rate cut. The Federal Reserve will hold its next interest rate meeting from September 16th to 17th, and the market widely expects a 25-basis-point rate cut at that time.
Meanwhile, the latest personnel developments at the Federal Reserve are also being closely watched by the market.
Previously, according to a Xinhua News Agency report, U.S. President Donald Trump dismissed Federal Reserve Governor Lisa Cook on August 25th on grounds of alleged mortgage fraud. This move, described by the media as "unprecedented," sparked controversy. Cook responded by stating that Trump had no authority to dismiss her and that she would continue to perform her duties.
Subsequently, Lisa Cook formally filed a lawsuit regarding the incident on August 28th. On August 29th local time, the Federal Court in Washington, D.C., held a hearing on the case. According to Reuters, the judge did not immediately issue a ruling and did not specify when a verdict would be announced. After hearing two hours of oral arguments, U.S. District Judge Jia Cobb requested that Lisa Cook's legal team submit a written statement elaborating on why the Trump administration's decision to remove Cook was unlawful.
CNBC reported that Cook's lawsuit could ultimately be brought before the Supreme Court to determine whether the grounds for her dismissal are valid and to set a standard for future presidential removals of Federal Reserve governors. CNBC also stated that Trump hopes the Federal Reserve will initiate rate cuts, while Lisa Cook and others have been resisting such pressure. Additionally, CNBC reported that Federal Reserve Chair Jerome Powell has asked the judge to maintain the "status quo," meaning Cook would not be dismissed until the court finally rules on whether Trump has legal grounds to remove Lisa Cook. If the judge agrees to this request, Lisa Cook will be able to participate in the Federal Reserve's upcoming September interest rate meeting.
The Wall Street Journal noted that the future of the Federal Reserve and its ability to continue operating as an independent institution largely depend on Lisa Cook alone. Public information shows that the federal funds rate is determined by the Federal Open Market Committee (FOMC), which consists of seven Federal Reserve governors from Washington and five rotating regional Federal Reserve presidents. Among them, the seven Federal Reserve governors form the core.
Deutsche Bank previously released a report analyzing that if Lisa Cook is removed, the power dynamics of the Federal Reserve Board will undergo a qualitative change. At that point, the Federal Reserve Board would have four stable dovish votes—constituting a majority of the seven seats on the Board. Although this may not immediately secure an absolute majority in the 12-member FOMC, these four dissenting votes from the Board would significantly increase internal pressure for "faster and larger rate cuts."
