Nasdaq, S&P 500 Futures Stumble In Fresh Week As Inflation, Earnings In Focus: Why This Analyst Says Downside Is Limited

Stocks look set for a negative start in the first trading session of the week as inflation worries take hold. The market attention now turns to Wednesday’s inflation report and the imminent start of the second-quarter reporting season. PEP) are also on tap. Bond yields continue to head higher, reflecting the nervousness of traders about the uncertain economic environment.

The Chinese economy is seeing a fits-a-start recovery, as evident from inflation data released Monday.

Cues From Past Week’s Trading:

The major averages closed the week ended July 7 lower, as the Federal Reserve’s hawkishness and a surprisingly soft June jobs report confounded the rate outlook further and prompted traders to take profits following the recent climb of the major averages to multi-month highs.

Small-cap stocks saw marked weakness, losing some of the momentum they built in recent weeks.

US Index Performance On Friday

Analyst Color:

After a strong first half, as traders look ahead to the continuation of the momentum, an analyst cautions of volatility but sees limited downside.

“As we move into July, the key issue will be whether inflation continues to move down and what that means for the Fed and interest rates,” said Brad McMillan, chief investment officer for Commonwealth Financial Network.

If the Fed continues to act more aggressively to fight inflation, the analyst expects a negative reaction from the market. “That said, given that the underlying reason for the Fed’s actions will be continued growth, markets have an economic cushion,” he said.

“So, while volatility is likely, the downside may be limited.”

Futures Today

Futures Performance On Monday

QQQ) moved down 0.33% to $365.02, according to Benzinga Pro data.

Upcoming Economic Data:

The week’s economic calendar is heavily loaded with data on prices and Fed speeches, both of which have the potential to move the market.

The Commerce Department is scheduled to release the wholesale inventories report for May at 10 a.m. EDT. Economists expect a 0.3% month-over-month increase in wholesale sales compared to 0.2% growth in April. Wholesale inventories may have edged down 0.1%, the same pace as in the previous month.

Fed Vice Chair for Supervision  Michael Barr is scheduled to speak at 10 a.m. EDT.

San Francisco Fed President Mary Daly, a member of the Federal Open Market Committee, is due to speak at 10:30 a.m. EDT.

Cleveland Fed President and FOMC member Loretta Mester will make a make public appearance at 11 p.m. EDT.

The New York Fed will release the results of its consumer inflation expectations survey at 11 a.m. EDT.

The Treasury will auction three- and six-month bills at 11:30 a.m. EDT.

Atlanta Fed President and FOMC member Raphael Bostic is due to speak at 12 p.m. EDT.

The Fed will release its report on outstanding consumer credit for May at 3 p.m. EDT. The measure is expected to decline from $23.01 billion in April to $20.50 billion in May.

See also: How To Trade Futures

Stocks In Focus:

• Tesla, Inc. (NASDAQ:TSLA) rose modestly in premarket trading after Jefferies raised the price target for the stock from $185 to $265.
• Tech stocks were mostly lower, led by Apple, Inc. (NASDAQ:AMZN).
• Helen of Troy Limited (NASDAQ:HELE) is due to release its first-quarter results ahead of the market opening.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures fell 0.45% to $73.53 in early European session after the commodity ended the previous week up 4.6%.

The benchmark 10-year Treasury note rose 0.026 percentage points to 4.074%, the highest level since early November.

Asian stocks ended Monday’s session on a mixed note, although the mood remained cautious ahead of the U.S. inflation data.

While China and Hong Kong were among the biggest gainers from the region, the Japanese, Australian, and New Zealand markets fell sharply.

Consumer price inflation data released from China showed that China is closer to seeing a deflationary environment. Consumer prices remained unchanged from a year ago in June compared to a 0.2% inflation rate in May. This marked the lowest inflation rate since February 2021.

Producer prices also fell more than expected in June. The data gave hope that the government will likely intervene with more stimulus measures to kickstart spending and growth.

European stocks were higher in late-morning trading on Monday.

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