Markets are showing signs of another rally as investors look ahead to new economic data. This data may shed light on how President Trump’s tariffs are affecting inflation.
Last week, stocks ended positively. The Nasdaq marked a new closing high, and the S&P 500 is close to reaching its record level again.
Futures for the Dow Jones rose by 68 points, approximately 0.15%. The S&P 500 futures climbed 0.13%, while Nasdaq futures increased by 0.09%.
The yield on the 10-year Treasury held steady at 4.285% after a drop last week, driven by expectations that the Federal Reserve might cut rates. The U.S. dollar dipped slightly against the euro but rose against the yen.
Gold prices fell by 0.93% to $3,458.90 per ounce as the market awaits updates from the Trump administration regarding Swiss gold tariffs. Oil prices also saw a decrease, with U.S. oil dropping to $63.63 per barrel and Brent crude falling to $66.38.
So far, tariffs haven’t caused inflation to spike. Inflation rates have remained lower than expected for months. Many businesses relied on stockpiles built before the tariffs, but restocking is becoming costlier.
Recently, some earnings reports have revealed that companies are absorbing higher costs instead of passing them on to consumers. This trend comes as the economy and hiring have begun to slow.
The Federal Reserve is cautionary about rate cuts, preferring to assess how tariffs may affect inflation and consumer expectations. The consumer price index for July is set to be released soon, with expectations of a 0.2% overall increase. The annual growth rate for prices is anticipated to rise slightly to 2.8% from June’s 2.7%.
On Thursday, the producer price index will be released, with analysts predicting a similar modest monthly increase.
Several Federal Reserve officials are scheduled to speak this week, particularly following the appointment of Stephen Miran as governor, which may tilt the central bank toward a more dovish stance.
Despite some tension between the White House and the Fed over interest rates, Wall Street remains optimistic. Morgan Stanley’s Mike Wilson recently stated that a new bull market has begun. He predicts the S&P 500 could hit 7,200 by mid-2026.
This optimism is echoed by other analysts, including John Stoltzfus from Oppenheimer, who recently raised his S&P 500 forecast for this year to 7,100, up from 5,950.
As traders absorb these changes, it’s essential to stay informed and adapt to the evolving economic landscape. Recent trends suggest a complex but potentially rewarding market ahead.
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Consumer Price Index,Inflation,Tariffs and trade
