Dow Jones Rebounds After Turbulent Week: Investors Eye Upcoming Economic Data

Dow Jones Today: Major Indexes Poised to Open Higher as US Stocks Stabilize After Volatile Week

Stephen Wisnefski is the Executive Editor of News at Investopedia. He has more than two decades of experience as a journalist and newsroom leader, including 25 years at Dow Jones and The Wall Street Journal. Stock futures are pointing to a slightly higher open for major indexes on Monday, as markets stabilize after last week's bumpy ride and investors look forward to critical economic data releases later in the week. Futures tied to the Dow Jones Industrial Average were up 0.2%, while those linked to the S&P 500 and Nasdaq 100 were up 0.3%. U.S. stocks finished higher Friday for the second straight day, capping off a wild week of trading in which major indexes recorded both their biggest one-day losses and gains since 2022. The S&P 500 and Nasdaq are riding four-week losing streaks. Concerns about the economy have weighed heavily on investor sentiment in recent weeks as several indicators have shown a slowdown in activity, boosting expectations that the Federal Reserve will need to start cutting interest rates aggressively. The economic calendar is light Monday, but picks up in the coming days with the release of data on inflation and retail sales. Large-cap technology stocks, which have been especially volatile over the past month after powering the market's gains for most of the year, were higher in premarket trading. AI investor favorite Nvidia (NVDA), Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META) and Microsoft (MSFT) were all gaining ground. The yield on 10-year Treasurys was little changed at around 3.94%. The yield had dropped below 3.7% last Monday after a weaker-than-expected July jobs report led market participants to believe the Fed would need to cut interest rates swiftly and deeply. The economic concerns eased later in the week when weekly jobless claims numbers were more benign. Gold futures were up slightly at around $2,480, while crude oil futures were up about 1% amid ongoing concerns about tension in the Middle East. Bitcoin was trading near $60,000, little changed from where it was at the end of last week.

Can calm follow last week's rollercoaster?

Wall Street is gearing up for a modest lift-off as the opening bell rings on Monday. Investors are eagerly awaiting key economic data and earnings reports that promise to shed light on the U.S. economy and consumer spending. Investors are hoping will this week be calmer than the last one, when markets were on a rollercoaster ride, spooked by recession fears. Futures for the Dow Jones Industrial Average are up 0.1%, the S&P 500 is inching higher by 0.2%, and the tech-heavy Nasdaq 100 is advancing by 02%. In premarket trading, regional bank KeyCorp surged after announcing a deal with Scotiabank, which will acquire a 14.9% stake for approximately $2.8 billion. Starbucks shares also rose following news that activist investor Starboard Value has taken a stake in the company. Traders are eyeing the New York Federal Reserve's report on consumer inflation expectations, set for release at 11 am ET. This week is packed with crucial economic reports: the Producer Price Index (PPI) for July on Tuesday, the Consumer Price Index (CPI) on Wednesday, and the retail sales report on Thursday. These reports will provide a clearer picture of inflation and consumer spending trends in the U.S. Major companies reporting earnings this week include Walmart, Home Depot, Cisco, Deere, and Applied Materials. These reports will be closely watched for indications of economic health and consumer behavior. Last week's stock market variations were flat for the US S&P 500, +0.3% for the Stoxx Europe 600, and -0.08% for the UK FTSE. Japan's Nikkei stood out with a -2.5% gain, but the index had plunged 12% on Monday. The VIX volatility index, often dubbed the fear index, spiked before calming down a bit. It remains in a worrying zone but is less frightening on the way down than on the way up. This renewed volatility is largely due to the loss of interest in the carry trade. Japan's change in monetary policy, even though it was widely anticipated, crashed this popular bet, which consists of borrowing at low rates in Japan to reinvest in presumably higher-yielding assets such as AI, tech stocks, or Mexican debt. The carry trade was both safe and remunerative, prompting investors, particularly hedge funds, to invest on a leveraged basis. When it came time to cut back at high speed, many asset classes were affected. This was essentially a technical correction, not a fundamental one, as argued by the managers at RBC BlueBay in a note published last Friday. Fundamentals were not entirely absent, as they took the form of doubts about US growth, consumer spending appetite, and questions about China's ability to accelerate. However, these elements have been the market's backdrop for months. The most likely hypothesis now is that the US central bank will launch its rate-cutting cycle to prevent the economy from going off course, while China will continue to struggle, caught between its structural problems (property fragility, overproduction, etc.) and external pressure (anti-dumping, technology embargoes, etc.). In this dual context (Fed and China), a new front seems to be opening up in China, where increased speculation on the bond market is forcing the central bank to take action to halt the fall in yields. This phenomenon had already been visible for a few weeks, but it has increased with the recent volatility and the shift of Chinese investors towards bonds, at the expense of equities and other asset classes. In the US, the financial community is still forecasting three or even four rate cuts this year, which would require a meeting with two rate cuts, given that there are only three meetings left between now and the end of December for the Fed. Reasonable people believe that there is no reason, at present, to carry out a double easing. Fed Governor Michelle Bowman reiterated over the weekend that there are still upside risks to inflation and that the labor market remains strong. She may therefore not vote in favor of a rate cut in September. The market is listening to this important voice, knowing that she is the most hawkish member of the FOMC: she is therefore playing her part in advocating a conservative approach to monetary policy. The situation in the Middle East remains tense. The United States is pressing ahead with peace negotiations, while at the same time stepping up its presence in the Mediterranean for fear of Iran retaliating against Israel. Japanese markets are closed for the public holiday on Monday. In China, Hong Kong and Shanghai are balanced. South Korea and Taiwan benefited from the strong performance of technology stocks, gaining 1% or more. Australia is up 0.4%, while India is down slightly. European leading indices are bullish. Today's economic highlights: