Suddenly, Wall Street cares about inflation again. After taking a backseat to the jobs report earlier this year, inflation data will take center stage next week as investors try to discern whether the Federal Reserve will cut in September. The latest consumer price index is set to release Tuesday, and the producer price index is due out Thursday. Other economic data such as retail sales is also on deck. A quarter-point cut is widely anticipated at next month’s Fed meeting, fed funds futures pricing shows. But, any suggestion that inflation is getting away from the central bank’s 2% target, just as the labor market shows significant weakening, will add to stagflation fears, and thwart that outlook. “The most important thing is the CPI data,” said Jay Woods, chief global strategist at Freedom Capital Markets. He added, “That will definitely dictate monetary policy.” Hotter inflation readings could also hobble a stock market that’s near all-time highs. In recent weeks, investors have been scanning nervously for any catalysts that could knock the S & P 500 . The broad market index has scaled a barrage of scary tariff headlines and conflicts abroad to recoup its April losses and top 6,400 at the end of last month. .SPX YTD mountain S & P 500 in 2025 But more strategists and technicians are worried a pullback is around the corner, of 5% or worse, citing high valuations, flagging momentum and rising concentration risk. This week, DataTrek Research co-founder Nicholas Colas pointed out the S & P 500 is trading at a ratio of around 22 , based on different forward price-to-earnings multiples, that reflect “peak confidence.” There’s also the seasonal weakness, given that August is a historically poor month for equities . On average, the S & P 500 loses 0.3% in August , according to data going back to 1990, from Wolfe Research. This week marked the one-year anniversary of the global market sell-off following the unwind of the yen carry trade. “Weird things tend to happen in August,” Woods said. “And I am just concerned that there’s a headline that could spook this market — this market has been on a tremendous run — and cause us to correct if we were to pull back.” On Friday, however, the major averages each closed out a winning week. The S & P 500 and tech-heavy Nasdaq Composite rallied 2.4% and 3.9%, respectively, in the period. The Dow Jones Industrial Average was higher by 1.4%. Growing politicization of Fed, data At least some of the early estimates suggest the risk to inflation is to the upside. Core CPI, which excludes volatile food and energy prices, are projected to land at a 3% handle on a year-over-year basis, according to FactSet consensus estimates. If that comes to pass or the metric comes in hotter than expected, that could muddy the inflation outlook. CPI and PPI also comes just one week ahead of the Fed’s Jackson Hole meeting in Wyoming, on Aug. 21-23, which will likely shape expectations for the September meeting, when the central bank is projected to cut for the first time since December. But the next batch of inflation reports that come from the Bureau of Labor Statistics could bring with it new questions around the trustworthiness of government data going forward, after President Donald Trump last week fired the BLS commissioner following the issuance of a weak jobs report . There’s more. On Thursday, Trump said he’s nominated Council of Economic Advisors chair Stephen Miran to a key seat on the Fed, to replace Adriana Kugler, who resigned last week . Miran is a potentially dovish pick who could act in opposition to Fed Chair Jerome Powell, whom Trump has repeatedly criticized for not lowering interest rates, and raises questions of the future for Fed independence. “If the perception of the Fed is that it is becoming politicized, that could really upset markets, both the bond market and the equity markets,” said Nanette Abuhoff Jacobson, global investment strategist at Hartford Funds. Tariffs and talks One item that may be a positive for markets is a news report saying Trump and Russia President Vladimir Putin could meet as soon as next week , with the U.S. expected to step up pressure on Moscow to end the conflict in Ukraine . Other potential catalysts include the Aug. 12 trade deadline for China, after which steep tariffs are expected to go into effect. Many expect that the date will be postponed. Earnings season slows to a trickle next week, before Nvidia draws attention once more at the end of the month. More than anything, investors expect there are still potential for some fireworks for an unsettled market before the summer comes to a close. “I think that we are probably going to be more in a digestion phase than anything else,” Freedom Capital Markets’ Woods said. Week ahead calendar All times ET. Monday, Aug. 11 Tuesday, Aug. 12 8:30 a.m. Consumer Price Index (CPI) 8:30 a.m. Hourly Earnings final (July) 8:30 a.m. Average Workweek final (July) 2:00 p.m. Treasury Budget (July) Earnings: Cardinal Health Wednesday, Aug. 13 Earnings: Cisco Systems Thursday, Aug. 14 8:30 a.m. Continuing Jobless Claims (08/02) 8:30 a.m. Initial Claims (08/09) 8:30 a.m. Producer Price Index (July) Earnings: Applied Materials , Tapestry , Deere & Co. Friday, Aug. 15 8:30 a.m. Export Price Index (July) 8:30 a.m. Import Price Index (July) 8:30 a.m. Empire State Index (August) 8:30 a.m. Retail Sales (July) 9:15 a.m. Capacity Utilization (July) 9:15 a.m. Industrial Production (July) 9:15 a.m. Manufacturing Production (July) 10:00 a.m. Business Inventories (June) 10:00 a.m. Michigan Sentiment preliminary (August)
