Wall Street Stocks Hover Ahead of Key Inflation Report/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ US stocks traded near record highs Monday as investors awaited key July inflation data. Economists expect a slight uptick in the consumer price index, raising concerns over stagflation risks. Federal Reserve officials remain divided on interest rate cuts amid economic uncertainty and Trump’s tariffs.
US Markets Quick Looks
- S&P 500 stayed near all-time highs set two weeks ago.
- Dow Jones Industrial Average rose 77 points (+0.2%) early Monday.
- Nasdaq Composite dipped 0.2% after hitting record highs recently.
- Economists expect July inflation at 2.8%, slightly higher than June’s 2.7%.
- Stagflation fears rise amid slowing consumer spending and persistent inflation.
- Fed official Michelle Bowman supports three rate cuts this year.
- Trump pushes for rate cuts; Powell remains cautious.
- Micron Technology up 4.8% after strong forecasts.
- AMC Entertainment jumps 7.5% on record per-ticket spending.
- C3ai plunges 31% after poor sales outlook.
Wall Street Stocks Hover Ahead of Key Inflation Report
Deep Look
Wall Street kicked off the week in a cautious mood Monday, with major indexes holding steady near their historic peaks as traders braced for a potentially market-moving inflation report. The S&P 500 hovered near its all-time high from two weeks ago, reflecting investor optimism but also hesitation ahead of fresh economic data. The Dow Jones Industrial Average gained 77 points, or about 0.2%, in early trading, while the Nasdaq Composite slipped 0.2% after recently touching record territory.
The week’s most anticipated development is the release of July’s Consumer Price Index (CPI) report, scheduled for Tuesday. Economists are forecasting a 2.8% year-over-year rise in prices—slightly above June’s 2.7%—indicating that inflation, while much cooler than its peak above 9% three years ago, remains stubbornly above the Federal Reserve’s 2% target. The persistence of higher-than-desired inflation has reignited concerns that recently imposed tariffs by President Donald Trump could reignite upward price pressures.
Those worries have stirred talk of a worst-case economic scenario: stagflation, a toxic mix of sluggish growth and elevated inflation. Stagflation poses a unique challenge for policymakers, as traditional tools to stimulate the economy, like cutting interest rates, can worsen inflation, while measures to tame prices, like rate hikes, can suppress growth further.
Michelle Bowman, a Federal Reserve governor, said Saturday that she views the labor market as the greater threat right now. Pointing to a surprisingly weak jobs report earlier this month, Bowman reaffirmed her support for three rate cuts before year’s end. Her stance echoes calls from President Trump, who has been pressuring the Fed to lower rates quickly to bolster the economy.
However, Fed Chair Jerome Powell and several other policymakers are urging patience. Powell wants to assess more economic data—particularly the impact of Trump’s tariffs—before making decisions on rate cuts. Tuesday’s CPI report could serve as a pivotal factor in shaping that approach.
Analysts at Stifel Financial are warning that signs of stagflation may already be emerging, citing slowing consumer spending as evidence that economic momentum is fading. They caution that growth could grind to a near halt in the second half of 2025, potentially triggering a reckoning for markets that have enjoyed a dramatic rally since bottoming out in April. “Rate cuts cannot save an overvalued S&P 500,” strategists Thomas Carroll and Barry Bannister wrote, suggesting that even aggressive monetary easing might not prevent a market pullback if earnings fail to keep up with lofty valuations.
In corporate news, several notable movers shaped Monday’s trading session. Micron Technology shares surged 4.8% after the semiconductor manufacturer raised its quarterly profit and revenue forecasts, citing strong demand and higher pricing for its computer memory products. AMC Entertainment jumped 7.5% after posting better-than-expected results for the spring quarter, with average ticket prices reaching record highs and customers spending more on concessions.
On the downside, shares of C3ai tumbled 31% after the artificial intelligence software provider warned of a possible operating loss of up to $124.9 million for its fiscal first quarter. CEO Thomas Siebel labeled the company’s sales performance “completely unacceptable,” rattling investor confidence.
International markets were mixed, with modest gains and losses across major European and Asian indexes. In the bond market, the yield on the 10-year U.S. Treasury held steady at 4.27%, unchanged from late Friday.
With markets at lofty valuations and economic indicators sending mixed signals, the coming inflation report could provide crucial direction for both traders and policymakers. Whether it confirms fears of stagflation or offers reassurance that price pressures remain contained, Tuesday’s data will likely set the tone for the remainder of the week.
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