Top 5 Things to Watch in the Markets Next Week By Investing.com

Investing.com — Investors will look to key inflation data on Wednesday for new clues about the potential size of an expected September interest rate cut by the Federal Reserve. Markets are likely to remain volatile, while retail earnings will be watched for signs of strength in consumer spending. Here’s your look at what’s happening in the markets for the week ahead.

1. CPI data

July data is expected to show that inflation continued to approach the Fed’s 2% annual target.

A reading showing only a modest cooling could ease fears that the Fed has thrown the economy into a tailspin by leaving rates high for too long. But a weak report could fuel recession worries, potentially triggering fresh market volatility.

The economic calendar also includes figures for July, as well as the weekly report on .

Investors will also get a chance 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 a trio of Fed policymakers on Thursday indicated they were more confident that inflation was cooling enough to cut rates.

2. Volatility risk

Investors look likely to remain on edge next week after last Monday’s stock market rout, triggered by a combination of US recession fears and the decline of a global yen-financed carry trade.

A bigger-than-expected drop in jobless claims on Thursday indicated that fears about the health of the labor market were overblown, helping markets recover most of their losses by Friday’s close.

The focus in the coming week will be on whether the Fed’s long-awaited rate cuts are priced in by upcoming economic data and how long a recovery in global trading remains.

Concerns about the widening conflict in the Middle East and the upcoming US election also mean that volatility is unlikely to die down anytime soon.

3. income

Earnings season is in its final stages, with most companies already reporting their quarterly financial results.

But there are still some notable names to be reported in the coming week, including retailers Home Depot (NYSE: ) and Walmart (NYSE: ).

Investors will be paying attention to what retailers have to say about the resilience of consumer spending, a major driver of economic growth, especially given some recent signs of weakness in economic data.

Other big names on the earnings record are Cisco Systems (NASDAQ: ) and Fox Corporation (NASDAQ: ).

4. Oil prices

Oil prices rallied last week as comments by Fed officials that they could cut rates as soon as September eased concerns about demand, while fears of an escalating conflict in the Middle East continued to raise supply risks.

gained more than 3.5% on the week, while futures rose more than 4%.

Fears about the prospect of a recession have eased, strengthening the demand outlook.

At the same time, geopolitical tensions in the Middle East have fueled fears of a potential conflict that could disrupt the region’s output and reduce global crude supply.

The possibility of retaliatory attacks by Iran against Israel is raising concerns about oil supplies from the world’s largest producing region.

5. UK data

Britain is due to release a series of economic data that will inform the outlook for monetary policy over the next few months.

Tuesday’s wage growth data is due out on Tuesday, followed a day later by the numbers, which will be closely watched for signs of lingering price pressures, particularly in the still-hot services sector.

Monthly GDP data on Thursday is expected to show almost no growth in , but the economy is expected to have expanded in the second quarter.

Meanwhile, Friday data is expected to rebound in July after falling the previous month.

The Bank of England cut interest rates for the first time since 2020 earlier this month, and markets are currently pricing in a roughly 33% chance of another quarter-point cut at its September meeting.

–Reuters contributed to this report