US stocks were little changed on Monday as investors prepared for a Federal Reserve policy decision and key inflation data in the week ahead. The focus was on events from tech giants Nvidia (NVDA) and Apple (AAPL), with Dow Jones Industrial Average futures pulling back 0.1% after a winning week for the major gauges.
Investors are cautiously optimistic after a mixed May nonfarm payrolls report, which reinforced expectations that the Fed will maintain interest rates at a two-decade high for a longer period. Trader expectations for a rate cut in September have decreased, while those for November have increased, according to the CME FedWatch tool.
The upcoming Fed rate decision and May’s Consumer Price Index inflation reading on Wednesday will be crucial for the stock market. In the meantime, attention is on Nvidia’s stock split and Apple’s developers conference, where CEO Tim Cook is expected to unveil a big push into AI.
Political upsets in Europe, including France’s President Macron calling a snap national election and Germany’s leader suffering a defeat, have also impacted the market. The euro slumped to its lowest level in a month, and the Paris stock index sank around 2%.
On the retail front, JP Morgan has identified Walmart (WMT) as a top play during the uncertain election season. Analyst Chris Horver believes Walmart offers a strong balance of defense and offense in a soft consumer backdrop, with potential for double-digit EPS growth.
RBC strategist Lori Calvasina’s note highlights concerns about market optimism regarding the timing of rate cuts. She stresses the importance of considering different scenarios, including one with no further Fed moves and stickier inflation, which could impact the S&P 500’s fair value.
Overall, the market remains cautious as investors await key economic data and events that could shape the direction of stocks in the coming days. Stay tuned for updates as the week progresses.
