Stock futures tumbled early Tuesday, clearly signaling that investors remain on edge ahead of another busy week of economic data, including key inflation measures. President Donald Trump made waves on Monday by announcing that he would be extending a 90-day halt to escalating tariffs on Chinese goods. This decision, welcome as it is, will go some way to take the heat off a rather skittish market, but it hasn’t completely calmed investor fears.
Though we kicked things off with a deep red turn in stock futures, Monday evening wasn’t looking half bad for the markets. Investors are focused on the July CPI report to see if inflation has peaked. That report should provide great insight into where inflation is headed. We’re projecting core CPI to rise 0.3% MoM and 3% YoY.
Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, reflected on the unusual market dynamics currently at play.
“Investors seem to be betting on upcoming interest rate cuts and counting on them to counteract the drag from tariffs. We think it is too early to make that assumption.” – Brent Schutte
Market analysts are betting on a nearly 87% chance of a rate cut next month. This artfully concealed amendment would have a seismic effect on stock price performance. As attention shifts toward the CPI report, many market participants are hopeful that favorable inflation data will support their expectations of looser monetary policy.
On another positive note, Sinclair Broadcasting Group has decided to conduct an internal strategic review of its industry. That extensive self-assessment might have already set the stage for sweeping changes, the largest of which would call for the merger or spinoff of its ventures business. Sinclair’s decision is further testament to the media conglomerate’s flexibility in an ever-changing industry environment.
At the same time, Celanese Corporation was enjoying a record second quarter, posting earnings and revenue well ahead of Wall Street’s expectations. In spite of these encouraging numbers, Celanese stock crashed 15% after market close. The company issued a warning about a “softening demand environment across most key end-markets in the second half of the year.” As such, Celanese expects third quarter earnings to be in the range of $1.10 to $1.40 per share.
Celanese’s management noted that order books are “developing at a slower pace so far compared to last quarter.” Now they’re working to avoid impact from these tariffs, while facing the constant shifts of consumer preferences.
As investors calculate corporate performance, they jangle their fingers in anticipation of the July CPI report. Second, they look ahead to possible changes in monetary policy and changes in market sentiment. The upcoming economic data will play a crucial role in shaping the outlook for stocks and investor confidence in the coming weeks.