Robert Finnerty Jr. and Michael Milano are seen at work on the floor of the New York Stock
U.S. stocks edged lower on Monday as investors braced for a fresh update on inflation that could shape the Federal Reserve’s next move on interest rates.
The S&P 500 slipped 0.2%, hovering just below its record high set two weeks ago. The Dow Jones Industrial Average fell 0.5% (down 203 points), while the Nasdaq eased 0.3% from its recent peak. The mild pullback reflects market caution ahead of Tuesday’s release of July’s consumer price index (CPI) report.
Economists expect the report to show prices up 2.8% compared with last year, slightly higher than June’s 2.7% inflation. While far below the 9% peak seen three years ago, inflation remains stubbornly above the Fed’s 2% target. Adding pressure, President Donald Trump’s trade tariffs have raised fears that inflation could climb again, possibly leading to a dreaded “stagflation” scenario—where economic growth stalls, but prices remain high.
Rate Cuts Debate Heats Up
The Federal Reserve faces a tricky balancing act. Cutting interest rates could boost hiring and spending, but might worsen inflation. Raising rates could control prices, but risk hurting the job market.
Fed Governor Michelle Bowman voiced support for three rate cuts this year, citing July’s weaker-than-expected job numbers. Trump has also been openly demanding rate cuts to support the economy. However, Fed Chair Jerome Powell has been more cautious, preferring to see the inflation data before deciding.
Some market strategists warn that the U.S. could already be drifting toward stagflation. Analysts at Stifel predict slower consumer spending and weaker economic growth in the second half of the year, warning that rate cuts alone might not sustain inflated stock valuations.
Corporate Movers
Several companies stood out despite the broader market slump:
- Micron Technology rose 3% after raising its profit and revenue forecasts, helped by higher chip prices.
- AMC Entertainment gained 2.6% after reporting stronger spring results, with record per-ticket spending on movies, food, and drinks.
- TKO Group Holdings surged 9.1% after securing a deal to stream UFC fights on Paramount+, though Paramount’s stock slid 4.1%.
- C3.ai plunged 26.1% after warning of a quarterly operating loss that could reach $124.9 million.
Gold Prices Cool Off
Gold prices fell 2.5% to $3,404.70 per ounce after Trump confirmed he would not impose tariffs on the metal, easing market jitters from last week’s confusion over Swiss gold bar imports.
Global and Bond Markets
Overseas markets saw mixed, modest moves in Europe and Asia. In bonds, the 10-year Treasury yield held steady at 4.27%.
With Wall Street’s eyes on Tuesday’s inflation data, the results could sway the Fed’s decision-making and set the tone for markets in the weeks ahead.
