US stocks slip lower; caution ahead of Fed meeting, key CPI release By Investing.com

Investing.com– U.S. stocks edged lower Monday, handing back some of the prior week’s strong gains ahead of a Federal Reserve meeting this week, as well as key inflation data. 

At 09:35 ET (13:35 GMT), fell 73 points, or 0.2%, dropped 11 points, or 0.2%, and slipped 36 points, or 0.2%.

Caution ahead of Fed meeting, CPI data

Investors are showing a degree of caution ahead of the conclusion of the latest on Wednesday, where the central bank is likely to keep interest rates unchanged.

Market watchers are keen to see how many rate cuts officials will signal for the rest of 2024, with the updated dot plot likely to point to two 25-basis point cuts this year, down from three in March.

Citi economists now expect the Federal Reserve to begin cutting rates in September rather than July, following the much hotter-than-expected May jobs data released last week.

“We now expect 75bp of total cuts this year in September, November and December,” the bank’s economists said in a Friday note.

“But the jobs report does not change our view that hiring demand, and the broader economy, is slowing and that this will ultimately provoke the Fed to react with a series of cuts beginning in the next few months,” they added.

inflation data is also due on Wednesday, before the Fed’s announcement, and is expected to show inflation remaining comfortably above the central bank’s target range. 

Inflation has been the Fed’s biggest consideration in altering interest rates, and the data could fire markets up ahead of Fed Chair Jerome Powell’s post-meeting press conference.

Despite this weakness, Wall Street indexes remain close to record highs, buoyed by recent gains in heavyweight technology stocks, chiefly market darling Nvidia (NASDAQ:).

Nvidia, Apple in the spotlight 

In the corporate sector, Nvidia stock fell 0.2%, handing back some of the AI chipmaker 10% advance last week, when it was helped by a 10-for-1 split announcement, pushing it past the $3 trillion market capitalization for the first time.

Such stock splits are a near-term positive for shares, according to Goldman Sachs.

Based on 45 stock splits within the Russell 1000 since 2019, stock prices typically climbed 4% in the week following the announcement “but prices did not evidence a clear reaction in subsequent weeks or around the effective date,” Goldman said in the note.

Apple (NASDAQ:) stock fell 0.2% ahead of the start of its annual developer conference later Monday, where the tech giant is expected to showcase how it is integrating artificial intelligence across its software suite, including a revamped Siri voice assistant and a possible tie-up with ChatGPT owner OpenAI.

Southwest Airlines (NYSE:) stock soared 7% after the Wall Street Journal reported that activist investor Elliott Investment Management has built a nearly $2 billion stake in the carrier and plans to push for changes.

Moderna (NASDAQ:) stock fell 0.6% despite the biotech company said its combination vaccine, which targets both Covid-19 and the flu, was more effective than existing standalone shots in a late-stage trial.

Crude rebounds after losses 

Crude prices rose Monday, steadying after three straight weeks of losses ahead of monthly reports from OPEC and the IEA.

By 09:35 ET, the U.S. crude futures (WTI) traded 0.6% higher at $76.01 per barrel, while the Brent contract climbed 0.5% to $80.04 a barrel.

The Organization of the Petroleum Exporting Countries is set to release its on Tuesday, where the oil group’s outlook on annual crude demand will likely be in focus.

A from the International Energy Agency is also due later this week.

(Amber Warrick contributed to this article.)