
Stock Futures Slip as CPI Data Looms
Market Reaction to U.S.-China Trade Truce
Monday saw a sharp rally in U.S. markets after the announcement of a U.S.-China tariff truce, marking a temporary pause in the ongoing trade war. The S&P 500 surged 3.3%, reaching its highest closing level since March 5, while the tech-heavy Nasdaq and Dow Jones also posted significant gains. The agreement included a reduction of U.S. tariffs on Chinese imports and similar reciprocal actions by China, which restored some confidence in global economic stability.
Investors responded positively to the announcement, with major sectors such as technology, consumer discretionary, and communication services leading the gains. Goldman Sachs revised its U.S. recession probability downward, reflecting renewed optimism. However, despite Monday's rally, the S&P 500 remains nearly 5% below its February record high, signaling that full recovery will require further economic progress and policy clarity.
Focus Shifts to Inflation Data and Monetary Policy
Attention has now turned to the April Consumer Price Index (CPI) report, set for release at 8:30 a.m. ET. Economists expect a 0.3% monthly increase, with the annual inflation rate likely holding steady at 2.4%. The core CPI, which excludes volatile food and energy prices, is projected to rise 2.8% year-over-year.
This data is critical for gauging the Federal Reserve's next steps on monetary policy. Markets are currently pricing in a 25-basis-point rate cut by year-end, with expectations of a September implementation. However, higher-than-expected inflation figures could diminish the likelihood of rate cuts, potentially shifting the Fed's trajectory. Federal Reserve Chair Jerome Powell is scheduled to speak later this week, and his remarks will likely provide additional insights into the central bank's outlook.

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