Investing.com — Investors will look to key inflation data on Wednesday for new clues about the potential size of the Federal Reserve's expected September rate cut. Markets are likely to remain volatile, while retail earnings will be watched for clues to consumer spending power. Here's your look at what's happening in the markets next week.
- CPI data
July data is expected to show that inflation has continued to approach the Fed's 2% annual target.
A reading showing only modest cooling could ease fears that the Fed has sent the economy into a tailspin by leaving rates elevated for too long. But the weak report could reinforce fears of a recession, which could trigger new market volatility.
The economic calendar also has July numbers and a weekly report on .
Investors will also have the opportunity to hear from several Fed officials including Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker and Chicago Fed President Austan Goolsbee.
Comments from three Fed policymakers indicated Thursday that they were more confident that inflation was cooling enough to cut rates.
- Volatility risk
Investors look set to be left reeling next week after last Monday's stock market plunge caused by a combination of fears of a US recession and the end of yen-backed exchanges around the world.
A larger-than-expected drop in jobless claims on Thursday showed that fears about the health of the labor market are widespread, helping markets recoup most of their losses late Friday.
The focus this coming week will be whether the Fed's long-awaited rate cut is justified by upcoming economic data and how much global trade liberalization remains.
Concerns about the conflict in the Middle East and the escalation of the US election also mean that volatility is not going away anytime soon.
- Salaries
Earnings season is in its final stages as most companies have reported their quarterly financial results.
But there are still a few notable names to report next week including vendors The Home Depot (NYSE: ) and Walmart (NYSE: ).
Investors will be watching what retailers have to say about the recovery in consumer spending, a key driver of economic growth, especially given recent signs of weak economic data.
Other big names on the earnings docket are Cisco Systems (NASDAQ: ) and Fox Corporation (NASDAQ: ).
- Oil prices
Oil prices gained last week as comments by Fed officials that they may cut rates as soon as September eased demand concerns, while fears of an escalation in Middle East conflict continued to raise supply risks.
gained more than 3.5% for the week, while futures rose more than 4%.
Fears about a recession have subsided, strengthening the necessary attitude.
At the same time, political tensions in the Middle East have fueled fears of a potential conflict that could disrupt regional production and reduce global supplies of crude.
The possibility of retaliatory strikes by Iran against Israel is raising concerns about oil supplies from the world's largest oil-producing region.
- UK data
The UK will release a series of economic data that will inform the outlook for monetary policy over the next few months.
Data on Tuesday's wage increase will be released on Tuesday, followed the next day by statistics, which will be closely watched for continued price pressures, especially in the still-hot services sector.
Monthly GDP data on Thursday is expected to not show any growth in, but the economy is expected to grow in the second quarter.
Meanwhile, Friday's data is expected to rebound in July after dropping last month.
The Bank of England cut interest rates for the first time since 2020 earlier this month and markets are currently pricing in around 33% of the half-quarter cut at its September meeting.
– Reuters contributed to this report
