Stocks waver in lead up to data deluge; CPI in focus

By Shubham Batra and Shashwat Chauhan

(Reuters) – Wall Street’s main indexes were marginally lower on Monday as investors refrained from making large bets ahead of a barrage of data later in the week with U.S. consumer prices in spotlight.

Eight of the 11 major S&P sectors were trading lower, with real estate and consumer discretionary leading losses.

Shares of Tesla (NASDAQ:) fell over 1%, leading losses amongst a broader decline in megacap and growth stocks.

Both the and the recouped most of their losses by the end of last week, after the benchmark index suffered its biggest one-day percentage drop in nearly two years on fears of recession and the unraveling of currency carry trade positions involving the yen.

Investors are likely to be on edge until Wednesday’s U.S. consumer price index (CPI) reading, which is expected to show headline inflation accelerated 0.2% in July on a monthly basis, but remain unchanged at 3% on a year-on-year basis.

Money markets are evenly split between a 50- and a 25-basis-point (bps) cut in U.S. interest rates in September, expecting a total easing of 100 bps by the end 2024, according to CME’s FedWatch Tool.

Figures for July U.S. retail sales on Thursday are likely to show marginal growth, and investors expect that any weakness in the data could reignite fears of a consumer slowdown and a potential recession.

Earnings reports from Walmart (NYSE:) and Home Depot (NYSE:), due later this week, will also be crucial for clues on consumer spending in the world’s largest economy.

“If inflationary data proves more sticky then that would lead to assumptions. The market will have to pull back some anticipation of a really aggressive Fed and that would increase volatility as well,” said Keith Buchanan, senior portfolio manager at GLOBALT Investments.

Fed Governor Michelle Bowman softened her usually hawkish tone ever so slightly on Saturday, noting some further “welcome” progress on inflation in the last couple of months even as she said inflation remains “uncomfortably above” the central bank’s 2% goal and subject to upside risks.

The , Wall Street’s fear gauge, was up slightly at 20.88 points, but much lower than the peak of 65.73 a week earlier.

At 9:45 a.m. ET, the was down 0.3% at 39374.38 points, the S&P 500 fell 0.2% to 5336.22 points, while the Nasdaq Composite was down 0.06% at 16734 points.

Starbucks (NASDAQ:) climbed 3.5% on reports that activist investor Starboard Value, which holds a stake in the coffee giant, wants the company to take steps to improve its stock price.

KeyCorp (NYSE:) jumped nearly 14% after Canada’s Scotiabank bought a minority stake in the U.S. regional lender in an all-stock deal worth $2.8 billion, while Hawaiian Electric dropped 16.7% after the utility firm raised “going concern” doubts.