Futures are flat, and inflation and earnings statistics are out of date. – The UBJ

The release of key economic data, testimony from Federal Reserve Chairman Jerome Powell and the start of the second-quarter earnings season have investors anticipating a critical week ahead, as evidenced by the cautious mood seen in U.S. stock index futures on Monday.

After Friday’s nonfarm payroll report showed a slowdown in U.S. job growth in June, investors became more optimistic about interest-rate cuts, further fueling concerns about labor market vulnerability. The Fed’s projected path of monetary policy for the rest of the year was shaped by the statistics.

Traders now see a 70% chance of a 25-basis-point rate cut at the Fed’s September meeting, up from 60% a week ago, according to CME FedWatch data. Overall, market expectations are for a total cut of about 50 basis points by year-end.

Thursday’s release of June’s consumer price index (CPI) data will be closely scrutinized for further insights into inflation trends. Economists are forecasting a modest 0.1% month-on-month rise in U.S. core inflation, which excludes volatile food and energy prices, is expected to rise 0.2%.

Despite the cautious outlook, the S&P 500 and Nasdaq extended their rally on Friday, hitting record highs supported by strong performances from major tech stocks like Meta Platforms, Microsoft, Apple and Alphabet. These megacap tech companies posted new highs in premarket trading, with Microsoft, Apple and Alphabet posting small gains while Nvidia posted a small decline.

The upcoming second-quarter earnings season, which begins July 12 with the release of reports from major banks including Citigroup, JPMorgan Chase and Wells Fargo, is expected to yield important insights into corporate profitability amid ongoing economic challenges and market dynamics.

However, early signs suggest a cautious start for financial stocks, with JPMorgan down 0.4% in premarket trading after broader losses that sent the S&P 500 bank index down 1.6% in Friday’s session. Investors are closely watching to see if the high valuations of select megacap stocks like Nvidia can be justified by their earnings results.

Federal Reserve Chairman Jerome Powell’s semiannual testimony before the Senate Banking Committee on July 9 and the House Financial Services Committee on July 10 will be key events shaping market expectations. Powell’s remarks, along with speeches by other Fed officials throughout the week, are expected to provide further clarity on the central bank’s stance on future interest rate changes.

In addition, economic data releases scheduled for Friday, including the Producer Price Index (PPI) for June and a University of Michigan consumer sentiment survey, will provide important information on inflationary pressures and consumer confidence, which will impact market sentiment and potential action by the Federal Reserve.

The S&P 500 e-mini index was down 2.25 points, or 0.04%, in premarket trading as of 5:57 a.m. ET, while the Dow e-mini index was up 9 points, or 0.02%. The Nasdaq 100 e-mini index was down 6.75 points, or 0.03%, but was slightly down .

Shares of Skydance Media rose 3.9% on Sunday when it announced its merger with Paramount Global. Skydance Media offered $4.5 billion in cash or stock, as well as an additional $1.5 billion to strengthen Paramount’s balance sheet.

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