U.S. stocks are expected to hold up relatively well. With data including the Consumer Price Index (CPI) and earnings announcements due this week, movements in long-term interest rates are likely to affect buying appetite.
The 3 major U.S. stock indices rose in the previous session, while the Dow traded near its highs. Data showed that economic sentiment in the University of Michigan Consumer Sentiment Index had deteriorated slightly, but inflation expectations came in below forecasts, creating a market environment conducive to buying. By sector, selling of defensive stocks was notable, while expectations for tech companies’ earnings pushed the market higher.
The intraday futures market was firm today, with S&P 500 futures up about 23.5 points and NY Dow futures up approximately $186. Depending on movements in long-term interest rates, buying momentum may be affected, and both inflation data and earnings announcements will be in focus this week.
Year-on-year growth in this week’s closely watched headline and core CPI is expected to accelerate to levels above forecasts, leading some to believe that aggressive buying will be difficult. Meanwhile, buying and selling related to adjustments is expected in the financial sector ahead of earnings announcements, while some buying appetite may emerge for AI-related tech stocks.
Overall, U.S. stocks are expected to remain subject to spillover effects depending on inflation data, and investors will need to closely monitor this week’s schedule of data releases and earnings announcements.