By Shubham Batra and Shashwat Chauhan
(Reuters) – U.S. stock index futures edged higher on Monday as investors focused on the U.S. consumer price index ahead of a data-packed week that could provide strong indications of Federal Reserve interest rate moves in September.
Markets closed amid heightened volatility last week, starting with investors unwinding currency carry trade positions, including the yen, after a weaker-than-expected July jobs report that sparked recession fears.
The stock index and Nasdaq recovered most of their losses over the past two sessions to end the week with small losses.
Investors are likely to remain on the sidelines this week until Wednesday’s release of the U.S. Consumer Price Index (CPI), which shows headline inflation rose 0.2% month-on-month in July but is expected to remain flat at 3% year-on-year.
According to CME’s FedWatch tool, money markets are split between a 50 basis point (bps) cut and a 25 basis point (bps) cut in U.S. interest rates in September, forecasting a total easing of 100 bps by the end of 2024.
U.S. retail sales due to be released on Thursday are expected to show a slight increase in July, and investors are betting that weak data could revive concerns about sluggish consumption and a possible economic recession.
Walmart (NYSE:) earnings report and Home Depot The Shanghai Composite Index (NYSE:), due to be released later this week, will also be crucial for providing clues about consumer spending in the world’s largest economy.
“With improving liquidity, fair valuation of tech stocks and the possibility of gradual rate cuts from the Fed starting in September, investors should weather the summer turmoil with a steady focus on longer-term opportunities,” said Seema Shah, chief global strategist at Principal Asset Management in New York.
Federal Reserve Governor Michelle Bowman on Saturday slightly softened her normally hawkish tone, saying inflation remains “uncomfortably above” the central bank’s 2% target and is at risk of upside, but noted further “welcome” progress on inflation over the past few months.
Wall Street’s fear gauge, , rose slightly to 20.57 points but was well below its peak of 65.73 a week ago.
As of 6:45 a.m. ET, the Dow E-mini was up 33 points, or 0.08%, the S&P 500 E-mini was up 10.75 points, or 0.2%, and the E-mini was up 50.75 points, or 0.27%.
Most large-cap and growth stocks rose in premarket trading, with Nvidia (NASDAQ:) and Amazon.com (NASDAQ:) leading the way, each up 0.7%.
Starbucks (NASDAQ:) rose 2.8% after reports that activist investor Starboard Value, which owns a stake in the coffee giant, is urging the company to take steps to boost its stock price.
Robinhood (NASDAQ:) market rose 1% after Piper Sandler upgraded the stock to “overweight” from “neutral” and also raised its price target.
KeyCorp (NYSE:) shares rose 10.2% after Canada’s Scotiabank acquired a minority stake in the U.S. regional financial institution in an all-stock deal for $2.8 billion.
Hawaiian Electric shares fell 7.1% after the utility company called into question its “going concern” status and said it had no plans to raise capital for the $1.99 billion Maui wildfire settlement it agreed to earlier this month.
