On Wednesday, stock futures exhibited relatively unchanged positions as the S&P 500 index remains within striking distance of its all-time high. Both the S&P 500 futures and Nasdaq 100 futures traded around the flatline, mirroring the movements of futures linked to the Dow Jones Industrial Average. This stability follows a trading session where the S&P 500 concluded flat, while the Nasdaq Composite saw a slight uptick of 0.3%. Conversely, the Dow Jones Industrial Average experienced a loss of 106.59 points, equating to a 0.3% decline.
Despite the mixed results, the three major indexes are still on track for a positive week, with the S&P 500 now less than 1% away from its record set in February. However, skepticism looms over Wall Street regarding the sustainability of this recent market momentum. Komal Sri-Kumar, president of Sri-Kumar Global Strategies, expressed his concerns during an interview on CNBC's Power Lunch, highlighting various macroeconomic factors that suggest the current situation may not be maintainable.
Sri-Kumar pointed to significant geopolitical issues, including the Israel-Iran conflict, along with the impacts of President Donald Trump’s tariffs and the fiscal implications of the One Big Beautiful Bill Act. These factors contribute to a cautious outlook among investors. Fortunately, tensions in the Middle East appeared to ease after Trump announced a ceasefire between Israel and Iran on Tuesday. Although he criticized both nations for violating the agreement, the ceasefire has seemingly held, and the U.S. is preparing for discussions with Iran next week.
Investors are also preparing for the upcoming release of the personal consumption expenditures price index reading, scheduled for Friday morning. Federal Reserve Chair Jerome Powell commented on Tuesday, suggesting that the preferred inflation measure could rise to 2.3%. Additionally, the core measure, which excludes food and energy prices, is anticipated to increase to 2.6%, a rise from the previous month’s readings of 2.1% and 2.5% respectively.
Despite these projections, Powell underscored the Federal Reserve’s commitment to controlling inflation, especially in light of the unpredictable effects of Trump’s tariffs on the economy. Sri-Kumar warned of a potential uptick in the inflation rate, anticipating that it will be reflected in the latter half of the year. He noted that rising yields could pose challenges for the Nasdaq in particular, suggesting that the S&P 500 may not be immune to similar pressures.
In addition to inflation concerns, investors are keenly awaiting the upcoming release of weekly jobless claims data, which is set to be published at 8:30 a.m. ET on Thursday. This data will provide further insights into the health of the labor market, an essential component of the overall economic landscape.
