Major United States benchmark averages retreated on Monday (Tuesday AEST) as traders positioned themselves ahead of crucial inflation data due later in the week, with a tariff deadline extension from President Donald Trump doing little to shift sentiment.
The Dow Jones Industrial Average fell 200.5 points or 0.5% to finish at 43,975.1, the S&P 500 declined 16 points or 0.3% to 6,373.5, while the Nasdaq Composite fell 64.6 points or 0.3% to close at 21,385.4.
Market attention is firmly on upcoming inflation readings that could determine the next move for U.S. interest rates. The consumer price index (CPI) for July, due Tuesday, and the producer price index (PPI) on Thursday are expected to be pivotal in shaping expectations ahead of the Federal Reserve’s September policy meeting.
Markets are expecting the July CPI to rise 0.2% month-on-month and 2.8% year-on-year. Core CPI, which strips out volatile food and energy prices, is forecast to increase 0.3% from the previous month and 3.1% annually, compared with June’s respective readings of 0.2% and 2.9%.
The data comes in the lead-up to the Fed’s annual Jackson Hole symposium in Wyoming on 21-23 August, a key event that could set the tone for the central bank’s September meeting.
According to the CME Group FedWatch Tool, markets are currently pricing in an 85.9% probability of a rate cut next month.
In political developments, investors reacted coolly to President Trump’s signing of an executive order late Monday, extending the deadline for tariffs on Chinese goods by 90 days. The move, finalised just hours before the existing pause was due to expire, failed to spark a rally in equities.
Bond markets were little changed, with the 10-year Treasury yield steady at 7.279% and the 2-year yield holding at 3.766%.
