S&P 500 inches higher ahead of key inflation data

The S&P 500 edged slightly higher on Monday as investors looked ahead to key inflation data expected later this week.

As of 13:17 ET (17:17 GMT), the Dow Jones Industrial Average was down 125 points, or 0.3%, while the S&P 500 increased by 0.1%, and the NASDAQ Composite gained 94 points, or 0.3%.

CPI Data Awaited for Economic Insights
This week’s focus is firmly on the consumer price index (CPI) inflation data, set to be released on Wednesday, which investors are closely watching for signals on the state of the economy and the trajectory of inflation.

The data is expected to show a slight cooling in inflation for July compared to the previous month, a trend that could fuel optimism about the possibility of lower interest rates.

The Federal Reserve is widely anticipated to start cutting rates in September amid increasing signs of a slowing U.S. economy. However, investors remain divided over whether the central bank will opt for a 25 basis point or 50 basis point rate cut.

Recently, the Fed indicated that further positive economic data could pave the way for a rate cut in September and that it doesn’t need inflation to hit its 2% annual target before beginning to lower rates.

“In general, inflation data presents a two-way risk: a high reading could spark fears of stagflation, while a low figure could strengthen the narrative of a hard landing,” Morgan Stanley noted in a recent report, though it also expressed the expectation that the trend of cooling inflation would continue.

Earnings Season Winds Down
While a few earnings reports are still expected this week, the quarterly earnings season is largely wrapping up. Home Depot (NYSE: HD) and Cisco Systems (NASDAQ: CSCO) are among the companies set to report in the coming days.

According to FactSet, the earnings season has been mostly positive, with about 78% of the S&P 500 companies that have reported Q2 earnings so far delivering a positive earnings-per-share (EPS) surprise.

JetBlue, KeyCorp, B. Riley Financial, Starbucks in Focus
JetBlue Airways Corp (NASDAQ: JBLU) fell 20% after the airline announced plans to issue $400 million of five-year convertible senior notes.

KeyCorp (NYSE: KEY) rose 8% following news that the Bank of Nova Scotia made a $2.6 billion offer for a 14.9% stake in the bank.

B. Riley Financial Inc (NASDAQ: RILY) plunged 52% after the company revealed it expects to report a Q2 net loss ranging from $14 to $15 per diluted share and announced the suspension of its dividend.

Starbucks Corporation (NASDAQ: SBUX) gained 3% after Bloomberg reported that the coffee chain is nearing a deal with Elliott Investment Management, which would grant Elliott a seat on Starbucks’ board. Elliott has been advocating for changes at Starbucks to boost its performance.