U.S. stock index futures were subdued as investors prepared for a data-packed week, with a focus on the upcoming U.S. consumer prices report. Following volatility last week due to a weaker-than-expected July jobs report, investors are closely watching for signals about the Federal Reserve’s interest rate moves in September. The market expects the inflation rate for July to rise 0.2% on a monthly basis, with an annual rate of 3.2%. There is uncertainty about the Fed’s decision, with money markets split between a 50-basis-point or 25-basis-point cut in interest rates.
Investors are cautious and likely to stay on the sidelines until the U.S. consumer price index (CPI) reading on Wednesday, which will provide insights into inflation trends. Money markets are predicting a total easing of 100 basis points by the end of 2024, with expectations of gradual Fed rate cuts starting in September. The upcoming July U.S. retail sales figures are also anticipated to show modest growth, and any weakness could spark fears of a consumer slowdown and potential recession. Market experts advise investors to focus on long-term opportunities and navigate through summer turbulence with a steady approach.
Fed Governor Michelle Bowman softened her stance on inflation slightly, noting some progress in recent months while acknowledging that inflation remains above the central bank’s 2% goal. The CBOE Volatility Index, which measures Wall Street’s fear gauge, showed a slight increase but remained significantly lower than the levels seen a week earlier. In premarket trade, most megacap stocks were up, with Nvidia leading the gains and Alphabet showing a slight decline. Starbucks saw a rise following reports of activist investor Starboard Value pushing for stock price improvements, while Robinhood Markets also climbed after an upgrade by brokerage Piper Sandler.
Despite the overall subdued market sentiment, some individual stocks experienced significant movements. Starbucks surged on activist investor interest, while Hawaiian Electric faced a 6% drop after raising concerns about its financial situation related to a recent settlement. The market remains uncertain as investors await key economic data releases and potential Fed rate cuts. Overall, experts advise investors to stay focused on long-term opportunities amid the market turbulence. The outcome of the upcoming reports on inflation and retail sales will likely influence market sentiment and decisions regarding interest rate adjustments.
