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(Bloomberg) -- Bond yields climbed and stocks got hit, with Wall Street traders betting Jerome Powell will throw cold water on market expectations for aggressive interest-rate cuts.

In the run-up to Powell’s Jackson Hole speech, Treasuries tumbled across the US curve, with the move led by shorter maturities. The dollar gained the most in over a month. The S&P 500 lost steam after getting close to its all-time high. Tech megacaps sold off. The swap market has cemented wagers the Federal Reserve will ease policy by about one percentage point this year.

“Will Powell allude to a slow walk down the monetary policy stairs or a speedy elevator ride down to the basement?” said Jose Torres at Interactive Brokers. “Powell is likely to choose the stairwell rather than the elevator.”

Investors waded through a raft of remarks from US policymakers, with Fed Bank of Kansas City President Jeffrey Schmid saying he wants to see more data before supporting cuts. His Boston counterpart Susan Collins says “a gradual, methodical pace” is likely to be appropriate. Her comments were echoed by Philadelphia Fed President Patrick Harker in a CNBC interview.

“The script is clear — the Fed is going to ease in September, but no one is portraying a desire to ease 50 basis points at this time,” said Andrew Brenner at NatAlliance Securities.

Traders are overplaying the prospects of an aggressive series of Fed cuts before the end of the year, according to Mohamed El-Erian.

“It is problematic in my mind that the market is pricing in so many rate cuts right now,” El-Erian, the president of Queens’ College, Cambridge, told Bloomberg Television on Thursday. “The market is overdoing it.”

Treasury 10-year yields advanced six basis points to 3.86%. The S&P 500 dropped 0.9%. The Nasdaq 100 fell 1.7%, with Nvidia Corp. leading losses in big tech. Intel Corp. tumbled 6.1%. Banks climbed and energy shares joined oil higher. Peloton Interactive Inc. surged 35% after the fitness company reported earnings that beat estimates.

“We are now once again not debating if they will cut, but by how much they will cut and how many times they will cut before year end,” said Kenny Polcari at SlateStone Wealth. “I am in the 25 basis-point and three-times camp. The US economy is not circling the drain – so there is no need to suggest that it is.”

Chris Senyek at Wolfe Research says his sense is that Powell will signal an easing cycle starting in September. However, contrary to what the market is pricing in for the remainder of 2024, he doesn’t believe the Fed Chair will signal a cut larger than 25 basis points.

Sam Stovall at CFRA also bets the next Fed-easing cycle will be initiated in a “more measured fashion” with a 25 basis-point cut.

“This ‘slower to lower’ approach will likely be intended to signal that the Fed is not behind the curve, but will allow it to ensure that the embers of inflation have been fully extinguished before concluding that its mission has been completed,” he noted.

On the economic front, the latest figures were more of a “mixed bag.” Jobless claims data showed the labor market is cooling only gradually — rather than rapidly slowing amid elevated rates. US manufacturing activity shrank at the fastest pace this year. And existing-home sales increased for the first time in five months.

“The US economy overall has, thus far, been robust enough to take an extended Fed rate pause,” said Don Rissmiller at Strategas. “But there’s a clear case for rate cuts soon.”

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This story was produced with the assistance of Bloomberg Automation.