As for stocks, Rich Mullen at Pallas Capital Advisors says that while he believes it still makes sense to stay invested, much of this year’s gains are likely already in.
“Inflation has been tame, and while many businesses have been able to avoid passing on higher costs to consumers, there are still questions on how much longer this trend can last,” he said.
Data this week showed underlying US inflation accelerated in July, but the cost of tariff-exposed goods didn’t rise as much as feared. A government report on producer prices due Thursday will offer insights on additional categories that feed directly into the Fed’s preferred price gauge — which is scheduled for later this month.
“Tariff-related costs are still being absorbed by corporate profit margins rather than passed on to consumers, giving the Fed room to pivot without sparking inflationary risk,” said Fawad Razaqzada at City Index.
Some companies have been holding off on price increases for fear that consumers will pull back on spending, which will heighten interest for Friday reports on retail sales and consumer sentiment.