U.S. stock markets fall ahead of Federal Reserve meeting and inflation release


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Stocks in U.S. equity markets weakened on Monday, shedding some of last week’s significant gains ahead of this week’s Federal Reserve meeting, as well as key inflation-related data.

Wall Street’s major indexes posted some losses on Friday, as a blowout nonfarm payrolls report prompted markets to rethink expectations for the central bank’s rate-cutting cycle.

Increasing political uncertainty in Europe, after votes in the European Union signaled a noticeable shift towards both right-wing and far-right parties, could also dent sentiment.

Despite Friday’s losses, Wall Street indices remained close to the record highs achieved the previous week, supported by gains in major technology stocks, notably Nvidia (NVDA).

Fed interest rate decision and CPI data approaching

This week, the focus will be primarily on the conclusion of Wednesday’s Fed meeting, where interest rates are likely to remain unchanged.

Market analysts are closely watching how many rate cuts officials may announce for the remainder of the year, as the updated dot plot is likely to point to two 25 basis point cuts in 2024, up from three in March.

Consumer price index inflation data will also be released on Wednesday ahead of the Fed announcement, and is anticipated to indicate that inflation is comfortably above the central bank’s target range.

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

Nvidia and Apple in the spotlight

In the corporate sector, Nvidia is likely to remain in the spotlight after the AI chipmaker posted a 10% gain the previous week, supported by the announcement of a 10-for-1 split, which helped it surpass $3 billion in market capitalization for the first time.

Apple (AAPL) will also be in the spotlight, as it is expected to show how the process of integrating artificial intelligence into its software is going, highlighting the revamped Siri voice assistant and a likely tie-up with OpenAI, owner of ChatGPT, at its annual developers’ conference scheduled for Monday.

Oil prices rebound after losses 

Oil prices rose Monday, stabilizing after suffering losses for three straight weeks, in anticipation of monthly reports from OPEC and the IEA.

The Organization of the Petroleum Exporting Countries (OPEC) will present its monthly report on Tuesday, which is likely to focus on the outlook for annual crude demand.

The International Energy Agency’s monthly report will also be released this week.

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