Investors on Sunday kept a cautious stance as U.S. stock futures were largely unchanged ahead of two crucial August inflation releases — the producer price index due Wednesday and the consumer price index due Thursday — following a weaker-than-expected August jobs report that has renewed expectations for Federal Reserve rate cuts later this month.
- Dow futures showed small declines in intraday updates, slipping 18 points (0.04%) in one read and about 47 points (0.1%) in a later note.
- S&P 500 futures were down roughly 0.09%–0.1%; Nasdaq 100 futures also edged lower.
- The August jobs report released Friday was weaker than forecast, increasing market bets on Fed easing.
- Market pricing via the CME FedWatch tool lifted the probability of a half-point rate cut at the Fed’s upcoming meeting.
- The S&P 500 remained about 0.8% below its most recent record high, according to FactSet.
- Strategy Asset Managers (AUM $850 million) flagged scope for a drop in short-term Treasury yields, especially the two‑year, if economic revisions remain negative.
Verified Facts
On Sunday, futures tied to the Dow Jones Industrial Average registered modest declines in separate updates: an 18-point (0.04%) drop reported in one update and a later update showing about a 47-point (0.1%) slide. S&P 500 and Nasdaq 100 futures moved down roughly 0.09%–0.1% in parallel reads.
The calendar for the coming week features the August producer price index (PPI) release on Wednesday morning and the August consumer price index (CPI) on Thursday. Both reports are closely watched for signs of inflation momentum that could affect Federal Reserve policy decisions.
Last Friday’s August employment report came in lighter than economists expected, a development that has been interpreted by many traders as increasing the odds the Fed will lower its benchmark interest rate at its next policy meeting. Market-implied odds from the CME Group FedWatch tool show a meaningful probability of a 50-basis-point cut conditional on incoming data.
Per FactSet data, major equity benchmarks were trading near record territory: the S&P 500 sat about 0.8% shy of its latest high as investors weighed mixed signals from the jobs market and potential inflation trends.
Context & Impact
Inflation readings will be parsed for persistence versus transitory signs. A cooler-than-expected PPI and CPI could strengthen the case for an earlier or larger Fed cut, supporting equities and pressuring front-end Treasury yields. Conversely, hotter-than-expected prints would likely push back on rate-cut bets and could widen equity volatility.
Short-term Treasury yields, particularly the two-year, are sensitive to shifting rate expectations. Strategy Asset Managers noted room for these yields to fall further if economic data are revised downward or continue to underperform.
Sector effects may be uneven: rate-sensitive sectors such as utilities and real estate typically benefit from easing expectations, while financials can react negatively to a steeper drop in short-term yields.
Official Statements
“Although we cannot be certain, it is possible that the job market is much weaker than the Federal Reserve is aware of or willing to acknowledge,”
Tom Hulick, CEO, Strategy Asset Managers
Unconfirmed
- Whether the weaker August jobs print signals a sustained downturn in labor market strength or a temporary slowdown remains unclear.
- Market expectations for the size and timing of Fed rate cuts could shift materially once PPI and CPI data are released; current probabilities are conditional on incoming prints.
Bottom Line
With futures only modestly changed, markets are in a holding pattern ahead of two inflation reports that could meaningfully alter rate-cut expectations and short-term yields. Investors should watch the PPI and CPI closely for signs of persistent inflation or further cooling in price pressures — either outcome is likely to move both bond and equity markets.