September 25, 2022

Traders on the floor of the New York Stock Exchange, August 4, 2022.

Source: NYSE

Stock futures were flat in overnight trading Sunday, after the S&P 500 index’s third consecutive weekly gain, as investors turned their focus to this week’s headline inflation report.

Futures on the Dow Jones Industrial Average were down 40 points. S&P 500 and Nasdaq 100 futures were down 0.1%.

The overnight actions followed the weekly gains for the S&P 500 and Nasdaq Composite as the surprisingly strong monthly jobs report eased some recession fears. The flexible labor market also indicated that the economy could withstand further rate hikes from the Federal Reserve.

The new CPI reading, due on Wednesday, will give investors more clarity on the central bank’s next move at its September policy meeting. Traders are now pricing in a higher probability increase of 0.75 percentage points next month, which would be the third consecutive increase of this size.

“The strong gains in the labor market last month should reinforce the claim that the US is not currently in a recession,” said Jeffrey Roach, chief economist at LPL Financial. “The major major gains in jobs were a surprise and could convince people… that the economy needs another 75 basis point increase at the next Fed meeting. All eyes are now on inflation.”

The core CPI, which includes energy and food, is expected to decline to 8.7% in July, from a 40-year high of 9.1% in June, according to Dow Jones.

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