US PPI, Trump’s return to X, institutional investors

Investing.com — Wall Street looks set to open on Tuesday as investors await the release of the latest producer prices as an indicator of future Fed action. Donald Trump’s return to social media platform X and institutional investors returning to US stocks will also be in focus.

1. July PPI first

The first leg of this week’s double bill of US inflation is set for later Tuesday, with July US producer prices data due before the US open and likely to influence markets before Wednesday’s focus passes to the consumer price index.

which measures price changes for producers as opposed to consumers, is expected to rise 0.2% in July, an overall annual increase of 2.3%, down from 2.6% the previous month.

The figure, which excludes volatile food and energy components, is also expected to rise 0.2% on a monthly basis, down from 0.4% in June, with annual growth of 2.7%, down from to 3.0%.

Investors will be poring over the data set to try to decide whether the Federal Reserve will opt for a 50 basis point cut or a 25 basis point cut at its September meeting – traders are currently evenly split between those two, according to the CME FedWatch tool.

In late July, the Fed kept the policy rate in the same 5.25%-5.50% range it has been in for more than a year, but signaled that a rate cut could happen soon what September, if inflation continues to cool.

2. Futs are bigger; PPIs, Home Depot in the spotlight

U.S. stock futures rose on Tuesday ahead of the release of the first of two key inflation statements that could influence the Federal Reserve’s thinking on interest rate cuts.

By 04:20 ET (08:20 GMT), the contract was 84 points, or 0.2 percent, higher, up 20 points, or 0.4 percent, and up 104 points, or 0.6%.

Wall Street’s main indexes saw choppy trading on Monday as investors appeared reluctant to commit ahead of inflation data.

Blue chips fell 140 points, or 0.4%, while the broad base ended flat and tech gained 0.2%.

The producer price index is expected to show small monthly gains in July (see above) and will be a tasty start ahead of Wednesday’s consumer price index.

Corporate earnings season continues with pre-bell results from retail giant Home Depot (NYSE: ) , the highlight of Tuesday’s session.

3. Trump returns to social media platform X

Republican presidential candidate Donald Trump held a discussion with Elon Musk, the owner of social media platform X, on Monday in an event the former president no doubt hoped would help reinvigorate his campaign after a rocky few weeks.

The three weeks since President Joe Biden dropped out of the race and endorsed Vice President Kamala Harris, now the Democratic nominee, have shaken Trump and his presidential campaign, with polls now looking to put the Democratic nominee in the lead.

Monday’s talk was delayed by about 40 minutes by an apparent cyber attack and marked Trump’s return to X, formerly known as Twitter, after a more than three-year hiatus from the site.

Trump’s account was suspended in 2021 after he was accused of inciting political violence during the 2021 Capitol attacks. Musk reinstated Trump’s account after his takeover of Twitter in 2022 and subsequent rebranding to X.

Shares of Trump Media & Technology Group (NASDAQ: ) fell more than 5% on Monday as Truth Social – the social media platform operated by the company – was seen as Trump’s social networking platform in his absence from X.

4. Institutional investors return to Wall Street – BofA

Wall Street’s main indexes rebounded last week after a sharp sell-off earlier in the week, with institutional investors taking a big part in the rally, according to Bank of America data released earlier Tuesday.

The bank’s clients last week were net buyers of nearly $6 billion worth of U.S. stocks for the first time in five weeks, the bank said in a note, in the 10th biggest inflow since 2008.

Bank of America’s institutional clients last week were net buyers for the first time in five weeks, while hedge funds and private clients were net sellers, the bank said.

It added that technology and communications services stocks saw the biggest inflows, while technology stocks saw inflows for the first time in four weeks.

5. Crude prepares to snap a winning streak

Crude oil prices fell on Tuesday, snapping a five-day winning streak, as traders piled on gains amid concerns over rising demand this year.

By 04:20 ET, WTI futures were down 0.4% at $79.75 a barrel, while the contract was down 0.4% at $81.98 a barrel.

Both crude benchmarks gained more than 3 percent on Monday, boosted by heightened tensions in the Middle East amid fears that a wider war in the Middle East will disrupt oil supplies from the crude-rich region.

However, despite these gains, benchmark crude has fallen about 3% over the past month as demand for oil remains tepid, especially compared to rising supply.

The Organization of the Petroleum Exporting Countries cut its 2024 forecast on Monday, the first cut since it was made in July 2023, and comes as signs grew that Chinese demand beat expectations.