U.S. stock markets hovered close to all-time highs on Monday, with investors keeping a close eye on upcoming inflation data that could influence interest rate policy.
The S&P 500 was little changed and remained near the record it set two weeks ago. As of early afternoon trading, the Dow Jones Industrial Average had slipped by 141 points, or 0.3%, while the Nasdaq composite edged up 0.2%, slightly extending its own record-setting run.
Wall Street’s main focus this week is Tuesday’s release of the Consumer Price Index (CPI), which will show how inflation trended in July. Economists expect consumer prices rose 2.8% compared to a year ago, slightly up from June’s 2.7%. While inflation has significantly cooled from its peak above 9% three years ago, it still sits above the Federal Reserve’s target of 2%.
Concerns are growing that tariffs introduced under President Donald Trump could reignite inflationary pressures. This has sparked worries about the possibility of “stagflation” — a scenario in which inflation remains high while economic growth stalls. Such a situation poses a challenge for the Federal Reserve, which cannot effectively address both issues with a single policy. Lowering interest rates could boost the economy but worsen inflation, while raising rates to curb inflation could slow job growth even further.
Federal Reserve Governor Michelle Bowman said over the weekend that she sees the labor market as a greater concern. Following a disappointing jobs report, Bowman reiterated her support for three interest rate cuts this year. Trump has also continued pushing the Fed to lower rates in an effort to support the economy.
Fed Chair Jerome Powell has taken a more cautious stance, preferring to wait for more data — particularly on how Trump’s trade policies are affecting inflation — before deciding the Fed’s next move. Tuesday’s CPI report could be a key piece of that puzzle.
Analysts at Stifel have warned that stagflation may already be developing, with consumer spending slowing noticeably. They caution that this could drag the economy to a near standstill in the second half of the year, potentially triggering a market correction after stocks surged from April’s lows to current highs.
“Rate cuts cannot save an overvalued S&P 500,” wrote strategists Thomas Carroll and Barry Bannister.
Some companies are managing to boost their stock performance through stronger earnings. Micron Technology gained 3.1% after raising its profit and revenue outlook for the current quarter, citing rising prices for its computer memory products.
AMC Entertainment rose 2.4% after reporting better-than-expected results for the spring. The movie theater chain said average ticket prices and spending on concessions hit all-time highs.
TKO Group Holdings jumped 8.5% after announcing a distribution deal with Paramount+ for its UFC events, including all 13 major pay-per-view fights and 30 additional “Fight Night” broadcasts. Meanwhile, shares of Paramount Skydance dipped 1.6%.
Chipmakers Nvidia and Advanced Micro Devices also moved higher after a U.S. official confirmed that both companies will share 15% of their revenues from advanced chip sales to China with the federal government. This agreement followed the government’s approval for Nvidia and AMD to resume selling their AI-focused H20 and MI308 chips in China. Nvidia rose 0.3%, while AMD climbed 1.3%.
On the downside, C3.ai plunged 23.5% after warning that it could post an operating loss as high as $124.9 million for the first quarter. CEO Thomas Siebel called the sales results “completely unacceptable.”
Global markets saw mixed results, with European and Asian indexes experiencing mostly minor fluctuations.
In the bond market, the yield on the 10-year U.S. Treasury slipped slightly to 4.26%, down from 4.27% late Friday.
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