Stock futures experienced a decline on Tuesday evening as investors braced for upcoming earnings releases from several major banks and awaited the latest wholesale inflation report. Futures linked to the Dow Jones Industrial Average fell by 105 points, equating to a 0.2% drop, while S&P 500 futures lost nearly 0.3%. Likewise, Nasdaq 100 futures slipped by 0.3% as well.
During the regular trading session, the S&P 500 index recorded a decline of 0.4%, and the Dow dropped by more than 400 points. In contrast, the Nasdaq Composite outperformed the other indices, gaining approximately 0.2% and achieving a record closing high. This surge was largely attributed to shares of Nvidia, which rose by 4% following the company’s announcement regarding a potential resumption of its H20 AI chip sales to China.
On Tuesday, June’s consumer inflation report weighed heavily on the markets. The headline figures indicated a 0.3% increase month-over-month, resulting in a 12-month inflation rate of 2.7%, consistent with the Dow Jones consensus. This reading has sparked concerns on Wall Street, particularly highlighting the effects of President Donald Trump’s tariffs as they permeate through the economy.
Over the weekend, President Trump escalated his trade war rhetoric by announcing a significant 30% tariff on imports from Mexico and the European Union, set to take effect on August 1. The slow ascent of inflation has become apparent, with evidence of tariff-induced price hikes now visible in both durable and nondurable imports. Joe Brusuelas, the chief economist at RSM U.S., stated, “This prompts an important question: Will service and housing inflation, which is easing but still elevated, cool further to offset what will be a more pronounced increase in durable and nondurable goods?”
Brusuelas further suggested that the Federal Reserve is likely to maintain a patient approach as the inflation landscape continues to evolve. Investors are anticipating another inflation reading on Wednesday when June’s producer price index report is released. According to the Dow Jones consensus estimates, a 0.2% increase is expected on a month-to-month basis.
In addition to the inflation data, several central bank representatives are scheduled to speak, including Richmond Fed President Thomas Barkin and Fed Governor Michael Barr. Their insights may provide further clarity on the Federal Reserve’s approach to managing inflation and the overall economic outlook.
