U.S Stocks Muted as Investors Wait for CPI Data to Determine the Fed's Path

US equities opened Monday with little movement, as traders prepared for a week packed with economic releases that could shape expectations for when the Federal Reserve will resume cutting interest rates.

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By 9:39 a.m. in New York, the S&P 500 edged up 0.1%, marking its second consecutive gain. The Nasdaq 100 was virtually unchanged, while the Cboe Volatility Index (VIX) hovered just below the 16 mark.

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The data-heavy week kicks off Tuesday with the July consumer price index (CPI) a closely watched inflation gauge. This report will give investors and policymakers a chance to assess how recently imposed tariffs have affected prices, especially against the backdrop of a cooling labor market. According to Anna Wong, chief US economist at Economics, the figures will be pivotal in determining whether the Fed opts for a rate cut in September.

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“The key report this week is tomorrow’s CPI, and the stakes are high,” noted Tom Essaye of The Sevens Report. “If inflation comes in hotter than expected, September rate-cut odds could drop sharply. The Fed would worry tariffs are starting to push prices higher. Since rate-cut expectations have fueled recent market gains, that scenario could turn into a fresh headwind for stocks.”

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Additional data points this week include producer price index (PPI) figures and retail sales, both of which will help paint a clearer picture of the economy’s trajectory.

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Semiconductor giants Nvidia Corp. and Advanced Micro Devices Inc. are drawing attention after reports they agreed to hand over 15% of revenue from Chinese AI chip sales to the US government in exchange for export licenses. This arrangement could pave the way for the White House to extend similar measures to other sectors, according to Deborah Elms of the Hinrich Foundation.

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Joshua Mahony, chief market analyst at Scope Markets, suggested the move represents “the beginning of a new phase of taxation” under President Donald Trump, with a focus on extracting revenue from companies seeking access to specific markets.

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Also in the spotlight is Intel Corp. CEO Lip-Bu Tan, who is scheduled to meet with the President at the White House. The meeting follows Trump’s recent public call for Tan’s removal, raising speculation over potential changes at the company’s leadership level.

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A Bank of America Corp. survey revealed that a record percentage of fund managers now believe US equities are overpriced. Roughly 91% of respondents called the market overvalued the highest level since the survey began in 2001. This view comes after a strong rebound from April’s tariff-driven lows.

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Despite these concerns, strategists at Citigroup Inc. boosted their year-end target for the S&P 500. They argued that recently announced tax cuts should help counteract the drag from tariffs on corporate earnings.

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The Citi team, led by Scott Chronert, pointed out that second-quarter results have been “impressively strong,” even though forecasts for the latter half of the year have largely stayed steady.

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In corporate news, Micron Technology Inc. shares jumped after the memory chipmaker lifted its revenue and earnings guidance for the fiscal fourth quarter. The company credited “improved pricing” for a key product category as a major driver behind the upgrade.

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With CPI data, PPI numbers, and retail sales all set for release, investors face a potentially volatile stretch. If inflation comes in cooler than expected, it could reinforce the Fed’s path toward rate cuts later this year, providing a tailwind for equities. However, any upside surprise in price pressures could shake confidence and temper the rally that has carried markets higher over recent weeks.

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The combination of macroeconomic signals, trade policy developments, and individual corporate news especially in the semiconductor space will likely set the tone for market sentiment in the days ahead.

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