Investing.com — U.S. stock index futures edged higher Tuesday in calm trading ahead of the release of key inflation data, which could cement a September Fed rate cut.
At 06:05 ET (10:05 GMT), Dow Jones Futures rose 20 points, or 0.1%, S&P 500 Futures gained 20 points, or 0.4%, and Nasdaq 100 Futures climbed 95 points, or 0.5%.
The main Wall Street indices saw choppy trading on Monday, with investors seemingly reluctant to commit ahead of the inflation data, especially after the increased volatility last week
The blue chip Dow Jones Industrial Average fell 140 points, or 0.4%, while the broad-based S&P 500 ended flat and the tech-heavy NASDAQ Composite gained 0.2%.
CPI inflation awaited for more rate cut cues
The focus this week is squarely on the latest U.S. inflation readings, starting with the producer price index on Tuesday, followed by the consumer price index on Wednesday, for more cues on the U.S. economy.
The PPI is expected to rise 0.2% on the month in July, an annual headline rise of 2.3%, down from 2.6% the prior month.
The core figure, which excludes volatile food and energy components, is also expected to rise 0.2% on a monthly basis, down from 0.4% in June, with an annual rise of 2.7%, a drop from 3.0%.
Investors will parse through the dataset to try and decide what the Federal Reserve will do at its September meeting.
Traders are split between a 25 and 50 basis point cut, with any signs of cooling inflation likely to give more weight to the likelihood to a bigger cut.
The Fed at the end of July kept the policy rate in the same 5.25%-5.50% range it has been for more than a year, but signaled that a rate cut could come as soon as September if inflation continued to cool.
Fears of an impending U.S. recession “look overstated,” analysts at UBS stated in a note on Monday.
The report suggests that despite recent market volatility and growing concerns over a potential economic downturn, the fundamentals remain strong.
“We expect the Federal Reserve to cut rates by 100 basis points in the remainder of this year, double our prior forecast, as it seeks to protect the labor market. However, recession risks look overstated, in our view, given that household finances remain solid,” the note states.
Retailers earnings due this week
While the second-quarter earnings season has mostly wound down, earnings from major retailers Home Depot (NYSE:HD) and Walmart (NYSE:WMT) are due this week.
The two are set to offer more cues on strength in consumer spending, which in turn ties into the outlook for inflation and the economy.
Strong consumer spending has mostly underpinned U.S. inflation this year, despite pressure from high interest rates.
Crude set to break winning streak
Crude prices slipped lower Tuesday, breaking a five-day winning streak as traders banked gains amid concerns about demand growth this year.
By 06:05 ET, the U.S. crude futures (WTI) dropped 0.2% to $79.92 a barrel, while the Brent contract fell 0.3% to $82.06 a barrel.
Both crude benchmarks gained more than 3% on Monday, boosted by elevated tensions in the Middle East amid fears that a bigger war in the Middle East will disrupt oil supplies from the crude-rich region.
However, despite these gains, the crude benchmarks have fallen around 3% over the course of the last month as demand for oil remains tepid, especially when compared to the growing supply.
The Organization of the Petroleum Exporting Countries cut its global demand forecast for 2024 on Monday, the first cut since it was made in July 2023, and comes after mounting signs that demand in China has lagged expectations.
