US stock futures edge lower with Powell testimony, CPI data on tap

Investing.com– U.S. stock index futures fell slightly in evening deals on Sunday as investors looked to testimony by Federal Reserve Chair Jerome Powell and key inflation data for more cues on interest rates this week.

Futures steadied after Wall Street surged to record highs on Friday, as softer-than-expected data ramped up optimism that the Fed will begin cutting interest rates by September. Powell’s testimony is expected to offer more cues on that front.

fell 0.1% to 5,615.25 points, while fell 0.1% to 20,604.25 points by 19:12 ET (23:12 GMT). fell 0.1% to 39,647.0 points.

Powell set to testify, CPI data approaches 

before the Senate and the House on Tuesday and Wednesday, respectively. A bulk of his testimony is expected to focus on monetary policy.

Powell had signaled last week that while the Fed had marked some progress towards bringing down inflation, policymakers still did not have enough confidence to begin trimming rates. The minutes of the Fed’s June meeting furthered this notion. 

Weaker-than-expected labor data from last week ramped up hopes that the labor market was cooling, giving the Fed more impetus to begin cutting interest rates.

But inflation is likely to be the central bank’s key point of consideration in reducing interest rates. inflation data is due later this week and is likely to tie into the bank’s outlook on rates.

Wall St hits record highs on rate cut hopes 

Growing expectations for a September rate cut saw investors pile into risk-driven assets, helping Wall Street indexes notch new highs. The and the performed far better than the , as hype over artificial intelligence kept traders largely biased towards technology stocks. 

The S&P 500 rose 0.5% to 5,567.19 points on Friday, while the Nasdaq rose 0.9% to 18,351.34 points. The Dow lagged, rising 0.2% to 39,375.87 points.

Traders were seen pricing in an over 72% chance for a 25 basis point cut in September, up from a 57.9% chance seen last week. 

Q2 earnings to begin this week

Beyond rate expectations, focus this week is also on the second-quarter earnings season, which is set to begin with a slew of heavyweight bank earnings on Friday.

Markets will be watching to see just how robust corporate earnings remained under pressure from high interest rates and sticky inflation.

JPMorgan Chase & Co (NYSE:), Wells Fargo & Company (NYSE:), and Citigroup Inc (NYSE:) are set to report earnings on Friday.