How are stock-index futures trading:
S&P 500 futures are up 0.3%.
Dow Jones Industrial Average futures are adding 0.2%.
Nasdaq 100 futures are gaining 0.5%.
On Monday, the Dow Jones Industrial Average fell 141 points, or 0.36%, to 39,357, the S&P 500 increased 0 points, or 0%, to 5,344, and the Nasdaq Composite gained 35 points, or 0.21%, to 16,781.
Futures show stocks will extend their rally from the slump of a week ago, though investors at the same time will be wary of data in the next few days that may impact the chances of interest rate cuts coming next month.
The producer prices index report will be published at 8:30 a.m. Eastern on Tuesday, consumer price index data will be released on Wednesday, and retail sales on Thursday, all covering July.
The ideal outcome for equity investors will be factory-gate and high-street inflation that continues to creep back towards the Federal Reserve’s 2% target, alongside retail sales that indicate households are feeling reasonably chipper.
“Optimistically, the markets seem to be looking past any potential mini spikes in the CPI—unless, of course, the print throws a curveball far, high, and outside expectations,” says Stephen Innes, managing partner at SPI Asset management.
“This scenario would challenge assumptions about the Fed’s ability to pivot towards more aggressive rate cuts to ensure a soft [economic] landing,” Innes adds.
Meanwhile, the overall mood in markets is notably more relaxed than that witnessed just over a week ago, when worries about overvalued tech companies, fretting about a U.S. recession and the apparent forced liquidation of positions linked to the Japanese yen carry trade caused a spike in volatility.
On Tuesday, the CBOE VIX index, a measure of expected S&P 500 volatility known as Wall Street’s fear gauge, was trading around 20, way below the 65 level to which it spiked last week during the stock market plunge.
