U.S. stocks were indicated to see muted moves on Tuesday, with the S&P 500 index and Nasdaq Composite inching toward further records, as investors awaited a report on producer prices and a report on retail sales due at 8:30 a.m. Eastern Time.

The Federal Reserve is set to kick off a policy meeting Tuesday also, concluding Wednesday afternoon, which hedge-fund pro Paul Tudor Jones referred to as one of the most important central bank meetings of the past four years, with investors fixated on the inflation outlook.

How are stocks benchmarks performing?

On Monday, the Nasdaq Composite COMP, +0.74% rose 104.72 points to close at a record 14,174.14, a gain of 0.7%, marking its first record since April 26, while the S&P 500 index SPX, +0.18%  rose 7.71 points, or 0.2%, to market its 29th record closing high of 2021.

The Dow DJIA, -0.25% fell 85.85 points, or 0.3%, to end at 34,393.75, off 1.1% from its May 7 record at 34,777.76.

What’s driving the market?

Central bankers and investors on Tuesday will parse data on U.S. retail spending and producer prices, looking for further evidence of rising inflation.

Investors will watch for May retail sales which are expected to rise 0.5%, after a 0.8% fall the previous month. The May producer-price index, or prices paid to producers, are expected to rise 0.5%, according to Dow Jones and MarketWatch. The core PPI, excluding volatile foods and energy prices, is estimated to increase 0.4%.

So far the U.S. stock market has been trading as if higher inflation in the recovery phase from the COVID pandemic will be a short-lived phenomenon, caused temporarily by easing of economic restrictions and supply-chain bottlenecks.

The big fear is that the Fed will be forced to scale back its bond-buying program sooner than its initial projections and eventually lay the groundwork for raising benchmark interest rates, which currently stand at a range of 0% to 0.25%.

A survey of global fund managers conducted by Bank of America found that nearly three-quarters of participants think the current spike in consumer prices will recede soon.

However, some prominent financial professionals aren’t so sanguine. On Monday, at a conference, JPMorgan Chase JPM, -1.70% CEO Jamie Dimon said the bank is bracing for the possibility of higher inflation, saying that “if you look at our balance sheet, we have like $500 billion in cash and we’ve actually been stockpiling more and more cash waiting for [an] opportunity to invest in higher rates.”

“But I do expect you are going to see higher rates and more inflation today.”

Separately, Paul Tudor Jones in a CNBC interview Monday morning said that that Fed policy makers are in danger of making a substantial policy mistake by treating rising price pressures as a transitory, or short-lived.

A report on manufacturing activity in the New York state area also is also due at 8:30 a.m.

In other economic reports, the May industrial production is also due at 9.15 a.m. and is expected to rise 0.5%. The National Association of Home Builders’ housing market index for June is due out at 10 a.m., at the same time as data on business inventories for April.

Which companies are in focus?
  • AMC Entertainment Holdings AMC, +15.38%  stock has more than doubled in the 10 trading days so far in June. Executives and directors of the movie-theater chain have stepped up stock sales to $13 million for the month to date.
  • Blucora IncBCOR raised its second-quarter and full-year financial outlook on Tuesday, citing a “much stronger” than anticipated final two weeks of the tax season. 
  • Sage Therapeutics Inc. SAGE and partner Biogen Inc. BIIB said a Phase 3 study of their major depressive disorder (MDD) treatment met its primary endpoint, as it showed “statistically significant improvement” in symptoms compared with placebo.
  • Shares in aircraft manufacturers Airbus and Boeing were in focus on Tuesday, after news of a settlement of a long-running trade dispute between the European Union and U.S. over state aid to the two groups. Airbus AIR stock climbed near 1.5% in European trading, while shares in Boeing BA rose near 1% in the U.S. premarket.
How are other assets faring?
  • The yield on the 10-year Treasury note TMUBMUSD10Y held steady around 1.49%. Yields and bond prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up less than 0.1%.
  • Oil futures CL00 advanced, with West Texas Intermediate crude for July delivery up 71 cents, or 1%, at $71.58 a barrel. Gold futures GC00 edged lower by 90 cents, or less than 0.1%, at $1,865 an ounce.
  • European equities were higher, with the pan-Continental Stoxx Europe 600 SXXP 0.3%. London’s FTSE 100 UKX was trading 0.4% higher.
  • In Asia, the Shanghai Composite SHCOMP closed down 0.9% higher, Hong Kong’s Hang Seng Index HSI ended 0.7% lower and Japan’s Nikkei 225 NIK gained 1%.

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