Indices close mixed ahead of fresh inflation data

• US stocks closed mixed to start the week.

• Traders struggled to extend a comeback rally after erasing most of the losses from last week’s big disappointment.

• New inflation data will arrive on Tuesday with the producer price index report for July.

US stocks wobbled on Monday, struggling to hold on to the gains that materialized late last week ahead of new July inflation data.

Shares swung between gains and losses throughout the session, unable to decisively erase losses from last Monday’s selloff, which was the worst in two years.

On Tuesday, investors will digest the first of two inflation data coming this week. The producer price index, a measure of wholesale inflation, is expected to be in line with June data at 0.2 percent.

The second update will be the main event, with the consumer price index set to show the rise in inflation faced by the average consumer last month. Economists expect the reading to show a slight monthly increase, though not enough to stir forecasts for the Fed to start cutting interest rates at its policy meeting next month.

However, reducing rates is a double-edged sword. Markets are calling for lower interest rates, but a move by the Fed would also be an acknowledgment of the slowing economy. Recession fears are what triggered the biggest sell-off and any weakness in the economic picture could be the catalyst for the next major move down in share prices.

“Bears believe an aggressive Fed tapering program is a recession warning, not a clear reflection that inflation has been tamed,” veteran investor Louis Nevallier wrote in a note on Monday.

Here’s where US indices stood at the closing bell at 4pm on Monday:

Geopolitical tensions flared again to start the week, with the Pentagon sending more US forces to the Middle East ahead of a potential attack by Iran. The US anticipates an attack on Israel after the assassination of a Hamas leader in Tehran. U.S. crude oil prices rose as much as 4% on Monday.

Here’s what’s happening today:

In commodities, bonds and crypto:

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