Stocks continue their tug of war after rallying a bit last month. Right now, we have the S&P 500 moving in a tight range between 4,100 and 4,180 since late May.

This might not be ideal, but it's a much better environment for investors than the declines we’ve seen since the start of 2022!

Today, stocks are down ahead of tomorrow’s inflation report. Investors brace for the fact that the data from the report could heavily influence the next stretch of trading for markets. It could also help shape the Federal Reserve’s interest-rate decisions for later this year. 

The big upcoming event will be the meeting of the Federal Reserve’s Open Market Committee next week on the 14th and 15th. Markets expect the Fed will hike rates by half a percent while continuing to offload assets. 

Markets will be watching language from the meeting carefully to read the tea leaves regarding future meetings.

Once we get a few more data points on inflation, hopefully, we can confirm that things are coming off the boil and the Fed, after June and July, can be a little less hawkish into the fall.

In fact, inflation may have already peaked, except for food and energy. Housing looks to have put in a top and is cooling thanks to higher mortgage rates. 

Auto sales are softening too after shortages crimped the supply of new vehicles, sending the price of used autos to the moon last year. 

There are also signs that retail sales, in general, are cooling with Target cutting its outlook and bringing in markdowns to clear excess inventory.

In the meantime, the Biden administration is weighing waiving tariffs on Chinese products to help lower prices. He’s already done so for Chinese solar panels produced overseas, which caused solar stocks to jump this week. 

Treasury Secretary Janet Yellen indicates that other tariffs could follow. These could be really bullish developments for companies that would benefit from the reduced prices caused by these import taxes, especially if China reciprocates.

To a bright future,

Ray Blanco
Chief Technology Expert, Technology Profits Daily
AskRay@StPaulResearch.com