U.S. stocks fall after PPI release

US stocks traded flat on Tuesday as investors remained cautious ahead of the release of key inflation-related data that could determine the Federal Reserve’s monetary policy outlook.

This lull in US futures trading continued a similar session on Wall Street, as investors awaited more clues about interest rates from inflation readings due both Tuesday and Wednesday.

The S&P 500 closed flat, the Dow Jones Industrials lost 0.2%, marking its first losing session in nine days. Meanwhile, the NASDAQ Composite rose 0.3%.

Wall Street is calm ahead of the PPI and CPI data

Investors will focus on the producer price index, due later today, and the consumer price index, set for release on Wednesday. These indicators will provide clues about when the Federal Reserve might begin cutting interest rates to boost the economy.

These readings follow a period where inflation was broadly flat in the first quarter of the year, which derailed expectations for an early interest rate cut. Any indication that inflation remained flat through April is likely to further reduce rate cut estimates, a trend that could lead to equity losses.

Some Fed officials have signaled in recent weeks that the Fed is in no rush to start cutting rates, emphasizing that more confidence is needed that inflation will return to its stated 2% target.

That said, a monthly survey of Bank of America fund managers for May has indicated that estimates of interest rate cuts since November 2021 have led to a bullish investment outlook.

In a survey, global fund managers managing $562 billion in assets reported that nearly 82% expect the first rate cut in the second half of the year, and 78% believe a recession is unlikely in the next 12 months.

GameStop continues its rally

The meme stock sector, exemplified by video game retailer GameStop (GME), has shown significant volatility.

The rally was triggered by the first post in three years on X.com from ‘Roaring Kitty,’ an account associated with Keith Gill, a financial markets analyst and social media influencer.

The first post on X.com in three years from ‘Roaring Kitty’, an account associated with Keith Gill, a financial markets analyst and social media influencer, triggered the rally. Gill, also known as ‘Deep F***ing Value’ on the Reddit forum, rose to prominence during the 2021 stock market frenzy involving meme stocks like GameStop and AMC Entertainment (AMC).

Along with GameStop, stocks of AMC and headphone producer Koss Corporation (KOSS) also experienced rapid gains.

Several popular internet memes, including the image of a man leaning forward in a chair to signify increasing seriousness, were uploaded to the ‘Roaring Kitty’ account. Roaring Kitty’ also posted a collection of other memes, although none of them mentioned GameStop or other stocks.

Elsewhere, Kraft Heinz (KHC) is considering selling its Oscar Mayer meat business for between $3 billion and $5 billion, according to a Wall Street Journal report on Monday. Meanwhile, Bloomberg has reported that Apple (AAPL) is preparing to sell its Vision Pro mixed-reality headset internationally.