Inflation will be front and center this week. The Labor Department will release June CPI data at 8:30 a.m. on Tuesday, followed by PPI on Wednesday. The reports should provide investors and policymakers with an early look at whether the stop-and-start conflict between the United States and Iran had any impact on price pressures last month.
Economists expect June headline CPI to fall 0.1% month-over-month, compared with a 0.5% increase in May. Annual inflation is expected to ease to 3.8% from 4.2%. Core CPI is forecast to rise 0.2% on the month, matching May's pace, while the annual core rate is expected to edge down to 2.8% from 2.9%.
Earnings season begins and sector performance diverges
Second-quarter earnings season also gets underway Tuesday, with large U.S. banks among the first companies to report. Analysts currently expect S&P 500 .SPX earnings to grow 23.7% from a year earlier, according to LSEG, up from expectations of 19.2% at the start of April.
Beneath the surface, S&P 500 sector performance painted a somewhat different picture. A majority of S&P 500 sectors finished higher, led by energy .SPNY, which gained more than 3% as crude oil futures CLc1 surged nearly 9%. Technology .SPLRCT was the clear laggard, falling about 2%, even as Apple AAPL.O managed to notch another record closing high.
Chip stocks bore the brunt of the selling. The PHLX Semiconductor Index .SOX dropped more than 4.5%, extending a recent retreat in the group.
Treasury yields climb and pressure rate-sensitive assets
Elsewhere, rising Treasury yields also weighed on rate-sensitive areas of the market. With the benchmark 10-year Treasury yields US10YT=RR climbing above 4.60%, the PHLX Gold/Silver Index .XAU fell more than 2%.
Here is a snapshot of where markets stood shortly after 4 p.m. ET.
Stocks fall as oil jumps and investors brace for data and earnings
U.S. stocks came under pressure Monday, with technology shares leading the market lower after President Donald Trump announced the reinstatement of a blockade on Iranian ports, the latest escalation in U.S.-Iran tensions.
The move sent oil prices sharply higher and prompted investors to dial back risk-taking. But geopolitics isn't the only thing on traders' minds. Markets are also heading into what could be a pivotal week, with major bank earnings, key inflation reports and congressional testimony from Federal Reserve Chair Kevin Warsh all on deck.
According to LSEG data, investors are currently pricing in at least one 25-basis-point Fed rate hike by year-end.
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