The U.S. stock market will probably get off to a constructive start this morning. Specifically, the equity market futures are in the green, which suggests some upward pressure at the opening bell. Notably, stocks staged an impressive rebound late last week, and traders may try to extend those gains.
In economic news, investors will be focusing on the nation’s inflation situation this week. Tomorrow, the Consumer Price Index (CPI) for the month of August will be released, followed by the Producer Price Index (PPI) on Wednesday. Many investors expect these reports will show that prices have started to decline from recent highs. Notably, costs for fuel and other commodities have softened considerably, and supply-chain problems in some industries have shown improvement.
Nonetheless, the Federal Reserve has affirmed its commitment to fighting inflation, and has been looking to bring prices down significantly. As a result, it is unclear if the central bank will become less aggressive about hiking interest rates, based on very limited data. Next week, the Federal Reserve is slated to weigh in with an interest-rate decision, and will issue some prepared remarks to the investment community. This event has the potential to move financial markets and should not go unnoticed.
In corporate arena, it will be a light week for news, with few widely-followed companies slated to post results. Nonetheless, later today we will hear from enterprise IT solutions provider Oracle, Corp. (ORCL). On Thursday, we will hear from Adobe (ADBE), a leading manufacturer of software that is widely used for creative design purposes, as well as for other applications (paperless communication, marketing, e-commerce, etc.). Investors will be closely watching these reports, as they may well provide valuable information about the health of the broader technology sector. Meanwhile, quite a few corporations have been providing cautious guidance lately, due to the challenging environment, and this could weigh on the market.
From a technical view point, the S&P 500 Index pulled back sharply in mid-August. However, stocks seem to have found some support over the past few sessions. It remains to be seen if the bulls can produce a meaningful buying campaign at this juncture, or if the current rally will stall. Clearly, investors will be watching the Federal Reserve, while also keeping an eye on the corporate profit outlook.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
