Investing.com -- Wall Street looks set to open higher Tuesday as investors await the release of the latest producer prices as a gauge of future Fed action. Donald Trump's return to the social media platform X and institutional investors coming back to U.S. stocks will also be in focus.
1. July PPI up first
The first leg of this week’s U.S. inflation double bill is scheduled for later Tuesday, with July U.S. producer price data due before the U.S. open and will likely sway markets before focus switches to the consumer price index on Wednesday.
The producer price index, which measures changes in prices for producers as opposed to consumers, is expected to rise 0.2% on the month in July, an annual headline rise of 2.3%, down from 2.6% the prior month.
The core figure, which excludes volatile food and energy components, is also expected to rise 0.2% on a monthly basis, down from 0.4% in June, with an annual rise of 2.7%, a drop from 3.0%.
Investors will parse through the dataset to try and decide whether the Federal Reserve will go for a 50 basis point cut or a 25 bps cut in its September meeting - traders are currently evenly split between the two, according to the CME FedWatch tool.
The Fed at the end of July kept the policy rate in the same 5.25%-5.50% range it has been for more than a year, but signaled that a rate cut could come as soon as September if inflation continued to cool.
2. Futures edge higher; PPI, Home Depot in spotlight
U.S. stock futures rose Tuesday ahead of the release of the first of two important inflation releases, which could influence the Federal Reserve’s thinking regarding interest rate cuts.
By 04:20 ET (08:20 GMT), the Dow futures contract was 84 points, or 0.2%, higher, S&P 500 futures climbed 20 points, or 0.4%, and Nasdaq 100 futures rose by 104 points, or 0.6%.
The main Wall Street indices saw choppy trading on Monday, with investors seemingly reluctant to commit ahead of the inflation data.
The blue chip Dow Jones Industrial Average fell 140 points, or 0.4%, while the broad-based S&P 500 ended flat and the tech-heavy Nasdaq Composite gained 0.2%.
The producer price index is expected to show small monthly gains in July [see above], and will be a tasty starter ahead of Wednesday’s consumer price index.
The corporate earnings season continues with results before the bell from retail giant Home Depot (NYSE:HD) the highlight of Tuesday’s session.
3. Trump returns to social media platform X
Republican presidential candidate Donald Trump held a discussion with Elon Musk, the owner of the social media platform X on Monday, in an event that the former president no doubt hoped would help revive his campaign after a difficult few weeks.
The three weeks since President Joe Biden dropped out of the race and endorsed Vice President Kamala Harris, now the Democratic nominee, have rattled Trump and his presidential campaign, with the polls now seeming to put the Democrat candidate in front.
Monday's talk was delayed by around 40 minutes by an apparent cyberattack, and represented Trump’s return to X, formerly known as Twitter, after an over three-year hiatus from the website.
Trump's account was blocked in 2021 after he was accused of inciting political violence during the 2021 Capitol attacks. Musk had restored Trump's account after his 2022 takeover of Twitter and its subsequent rebranding to X.
Shares of Trump Media & Technology Group (NASDAQ:DJT) sank over 5% on Monday as Truth Social - the social media platform operated by the company - had been seen as Trump's go-to social media platform in his absence from X.
4. Institutional investors return to Wall Street - BofA
Wall Street’s main indices rebounded last week after the sharp selloff at the start of the week, and institutional investors were very much part of the rebound, according to data from Bank of America released earlier Tuesday.
The bank’s clients last week were net buyers of U.S. stocks, to the tune of almost $6 billion, for the first time in five weeks, the bank said in a note, in the 10th largest inflow since 2008.
Bank of America's institutional clients last week were net buyers for the first time in five weeks, while hedge funds and private clients were net sellers, the bank said.
It added that tech and communication services stocks saw the largest inflows, while tech stocks saw inflows for the first time in four weeks.
5. Crude set to break winning streak
Crude prices slipped lower Tuesday, breaking a five-day winning streak as traders banked gains amid concerns about demand growth this year.
By 04:20 ET, the U.S. crude futures (WTI) dropped 0.4% to $79.75 a barrel, while the Brent contract fell 0.4% to $81.98 a barrel.
Both crude benchmarks gained more than 3% on Monday, boosted by elevated tensions in the Middle East amid fears that a bigger war in the Middle East will disrupt oil supplies from the crude-rich region.
However, despite these gains, the crude benchmarks have fallen around 3% over the course of the last month as demand for oil remains tepid, especially when compared to the growing supply.
The Organization of the Petroleum Exporting Countries cut its global demand forecast for 2024 on Monday, the first cut since it was made in July 2023, and comes after mounting signs that demand in China has lagged expectations.