Stocks experienced notable volatility last week, swinging sharply up and down. As August progresses, a period when many traders prefer vacation, the market appears to be stabilizing.
Futures for the Dow Jones Industrial Average indicated a modest increase of 39 points, or 0.1%, suggesting a positive opening. Similarly, futures for the S&P 500 rose by 0.2%, while contracts for the tech-heavy Nasdaq 100 climbed 0.3%. On Friday, the S&P 500 closed close to its opening level despite significant fluctuations earlier in the week, and the Nasdaq 100 and Dow Jones Industrial Average ended slightly below their initial levels.
The recent large market swings might signal potential for continued volatility, but traders may be hoping for a calmer remainder of the month. With the majority of the earnings season concluded, attention will turn to upcoming reports from major companies such as Home Depot, Cisco Systems, and Walmart this week. Additionally, key economic data, including new inflation figures, retail sales, and consumer confidence reports, are anticipated.
Inflation is expected to be a crucial factor this week as investors speculate on the Federal Reserve’s next move at its September meeting. According to the CME FedWatch tool, markets are currently considering the possibility of a quarter-point or a half-point interest rate cut.
Paul Donovan, an economist at UBS, commented, “Financial markets appear to have calmed down after last week’s turmoil. The inflation data expected this week will be highly significant.”
Early Monday saw little change in bond yields. The yield on the benchmark 10-year U.S. Treasury bond was at 3.958%, while the 2-year note yield stood at 4.078%.
