The U.S. stock index futures were rangebound in evening deals on Sunday, showing some stability after experiencing wild swings last week. The focus is currently shifting towards key inflation data that is set to be released this week. Last week saw steep losses initially, but the week ended with the market mostly flat due to a mix of bargain hunting and easing fears of a recession. The persistent bets on interest rate cuts have also played a role in aiding the stock markets.
This week, all eyes are on the consumer price index (CPI) inflation data that is expected to be released on Wednesday. This data is crucial as it will provide more insights into the overall economy and the state of inflation. The reading is anticipated to have cooled slightly in July compared to the prior month. This trend is likely to boost optimism around lower interest rates. Investors are divided between a 25 basis point or 50 basis point cut in September, according to CME Fedwatch. However, the Federal Reserve is widely expected to initiate rate cuts in September, given the signs of a cooling U.S. economy.
Stock Market Performance
Despite the recent volatility, Wall Street indexes closed mildly higher on Friday and managed to retain some of their rebound from the previous week’s lows. The tech sector experienced a rout, and fears of a U.S. recession led to significant losses in stock indexes, with the Nasdaq even entering correction territory. However, bargain hunting in tech stocks and the reassurance that the recession fears may be exaggerated helped the market recover most of its losses, with U.S. stock benchmarks ending the week nearly flat. The S&P 500 rose 0.5% on Friday, the NASDAQ Composite rose 0.5%, and the Dow Jones Industrial Average increased by 0.1%.
Looking beyond the inflation data release on Wednesday, the market will also be keeping an eye on upcoming earnings reports. While the second quarter earnings season has largely wrapped up, there are still some significant earnings announcements to come this week. The market will likely react to these earnings reports, along with any new economic data that may influence investor sentiment and market direction. As uncertainty continues to loom over the global economy, the stock market is likely to remain volatile in the coming weeks.