Trading Week Awaits Inflation Reports Starting Wednesday

Wednesday morning, Consumer Price Index (CPI) data for July comes out. Analysts expect the second-straight lower headline Inflation Rate, to +3.4% year over year from +3.5% last report. This would be the second month in a row with lower headline CPI, after peaking at a 3-year high at +4.2% in May. Subtracting inflated food and energy prices, we are expected to scale way back to +2.5%, where we haven’t been since the first couple months of the year.

Should these results stay within the range of expectations, it ought to further excuse the Fed from making a move higher on interest rates at its next meeting in September. Inflation rates looked to be heating up pretty rapidly, but once negotiations began to end the Iran war, oil prices and transportation costs started to moderate. Despite a bumpy road on the peace front, investors chose to remain positive.

Looking at the wholesale side of inflation, however, the Producer Price Index (PPI) depicts a steeper incline: +5.5% was reported on headline last month. Thursday morning’s July numbers are expected to bring this down to +5.1%, but this is still 300+ basis points (bps) above where the Fed had considered optimal inflation levels. And, of course, wholesale inflation is something of a precursor to future retail (CPI) inflation.

Not only would these cooler prints alleviate the Fed’s obligation regarding the Fed funds rate, but investors would likely reward such a move with another push into record-high trading territory. The other edge of that sword, meanwhile, supposes higher-than-expected inflation numbers may bring about the opposite reaction in the major indexes. Likely markets stay muted until Wednesday morning.

Earnings Reports This Week: CSCO Wednesday & More

The sheer number of earnings reports hitting the tape this week continue to come full throttle, even if many of the marquee names in the market — including 6 of the “Mag 7” — have already reported for the quarter. The biggest name this week will likely be Cisco Systems CSCO Wednesday afternoon, with a few lesser-known AI infrastructure stocks reporting this week, as well, such as CoreWeave CRWV tomorrow and Nebius NBIS mid-week.

RocketLabs RKLB, a launch and spacecraft services and components supplier, is expected to grow Q2 earnings by +70% and revenues by +60.25% year over year. This company currently has a Zacks Rank #4 (Sell) and has missed earnings estimates in four of its past six quarters. Hims & Hers HIMS also reports after today’s closing bell, swinging to a bottom-line loss in the quarter, -141% year over year, on +26.7% revenue growth. HIMS is presently a Zacks Rank #3 (Hold).

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