US stock futures continued to see a limited performance for a second day in a row ahead of the CPI data release later today.
Last week’s remarks from Jerome Powell and other Fed governors have affected expectations regarding monetary policy, impacting appetite for risk.
As a result, the stock market could react with strong volatility if inflation data comes up far from estimates. While forecasts point to a slowdown in global inflation, lower-than-expected data could help the market extend its rebound above its previous peak. Such reading could strengthen the case for an end to the Fed’s tightening cycle.
At the same time, lower interest rate expectations could support the consumer discretionary sector. The latter could also remain in focus this week, with Walmart and Target’s earnings release later this week could shed some light on U.S. retail prospects ahead of Black Friday.
The sector could also react to the job market data release later this week.
The technology sector could be exposed to some price corrections if traders move to secure their gains. The sector has recorded successive gains for more than two weeks and could also strongly react to the inflation data release as well as changing monetary policy expectations and appetite for risk.