Powell Didn’t Wake Up the Stock Market. This Week’s Inflation Data Will.

Powell Didn’t Wake Up the Stock Market. This Week’s Inflation Data Will.

Federal Reserve Chair Jerome Powell did little to shake up a stock market that was already hovering around record levels. What will really matter this week is inflation data.

The Dow is down 14 points, or less than 0.1%., in Tuesday afternoon trading. The S&P 500 was up 0.1%. The Nasdaq Composite was up 0.1%. Any move higher for the S&P 500 and Nasdaq from yesterday’s levels will mark a fresh record close.

The market has been in a lull with traders taking time off last week for the Independence Day holiday weekend. Though the June employment report came on Friday, it did little to substantially shake things up.

During his first of two days of Congressional testimony on Tuesday, Powell didn’t offer much that traders didn’t know. To summarize: inflation data is trending better, but central bank officials need more confidence it’s trending sustainably toward 2%.

That’s where the consumer price index for June on Thursday and the producer price index on Friday come in. Those betting on interest rate cuts sooner rather than later are hoping for cool inflation reports.

On the flip side, a hot report would spell trouble for the latest run of record highs for the S&P 500 and Nasdaq.

Odds of a September interest rate cut were recently at 73.3%, according to the CME FedWatch Tool, but it all comes down to the data.