After a volatile session earlier in the day, stock futures opened higher Monday evening as traders awaited the release of a much-anticipated fresh inflation report.
As the overnight session began, contracts on the S&P 500, Dow, and Nasdaq were all marginally higher. The S&P 500 and Dow both halted five-session losing streaks during regular trade, but the Nasdaq extended its losses from last week.
Traders will receive the Labor Department’s August consumer price index (CPI) on Tuesday, which is expected to show continued high inflation across consumer goods and services.
According to Bloomberg statistics, consensus economists estimate the broadest measure of CPI will rise 0.4 percent in August compared to July and 5.3 percent compared to August 2020. The headline CPI increased by 0.5 percent month over month and 5.4 percent year over year in July, the greatest annual growth rate since 2008.
While this inflation report is expected to moderate slightly from July’s levels, it will most certainly reaffirm the continuous pricing pressures that are rippling across the improving economy. Another high reading might cast doubt on some Federal Reserve policymakers’ belief that inflation is only temporary and will subside as the recovery progresses.The persistent price pressures have sparked arguments about when the central bank will begin to pare asset purchases and make other monetary policy changes to avoid overheating.
“With the boost from fiscal stimulus fading, real incomes being squeezed by surging prices, and supply shortages showing little sign of easing, the Delta variant is far from the only headwind to the economic recovery,” Andrew Hunter, senior U.S. economist for Capital Economics, wrote in a note on Monday. “We’ve long expected GDP growth to slow more sharply over the second half of the year than others anticipated, and the risks to our forecasts now look skewed to the downside.”
An increasing number of economists have suggested the peak growth rates have already likely passed this year, with easy gains during the earlier stages of the reopening already made. These assessments have coincided with more cautious views on the U.S. equity market for the rest of the year, with slower economic growth likely translating to slower company earnings growth as well. Firms including Bank of America have recently slashed their price targets on the S&P 500 and suggested the index will end the year slightly lower than current levels.
Others have maintained that any pullback could present a buying opportunity.
“It’s been consistent since the pandemic has started, to buy on dips. I definitely don’t see that behavior changing any time soon,” Brian Vendig, MJP Wealth Advisors president, told Yahoo Finance Live on Monday. “I’d still say stay balanced toward equities, but be very selective in making sure that you’re picking the areas that can provide protection to margin, profitability growth, and also as a means to hedge off any unnecessary inflation.”
6:10 p.m. ET Monday: Stock futures rise
Here were the main moves in markets as of Monday evening:
- S&P 500 futures (ES=F): +6 points (+0.13%) at 4,475.00
- Dow futures (YM=F): +41 points (+0.12%) to 34,911.00
- Nasdaq futures (NQ=F): +13.5 points (+0.09%) to 15,450.25
Source: Yahoo News