By Avinash P and Purvi Agarwal
Aug 10 (Reuters) – Wall Street’s main indexes were on course for a muted open on Monday, as investors weighed developments in the Middle East that could influence the reopening of the Strait of Hormuz and braced for a week laden with crucial inflation data and earnings.
Iran said it was close to a final agreement with Oman defining new shipping lanes between them through the strait but repeated that the U.S. must meet several conditions before the strategic waterway reopens.
Easing energy flows through the crucial choke point could mitigate concerns over heightened oil prices that have spurred inflation concerns and bets of interest rate hikes by central banks worldwide.
Against this backdrop, readings of consumer and producer prices due later this week could offer key clues on the Federal Reserve’s monetary policy path, given Fed Chair Kevin Warsh’s stance of offering muted forward guidance.
“The prevailing narrative is that inflation remains … high, but is not that far from the Fed’s 2% goal. It is not victory, but it is progress,” said Bob Edwards, chief investment officer, Edwards Asset Management.
Rate-hike bets were tempered on Friday after data showed the U.S. economy unexpectedly shed jobs in July. Traders now price in a 44% chance of a rate hike in September, according to the CME FedWatch tool.
“A benign CPI report and no September rate hike would give this market permission to run faster,” Edwards added.
Comments from Cleveland Fed President Beth Hammack are expected later in the day.
At 8:36 a.m. ET, Dow E-minis were down 72 points, or 0.13%, and S&P 500 E-minis were down 5.25 points, or 0.07%. Nasdaq 100 E-minis were down 43 points, or 0.14%.
The benchmark S&P 500 hit a record close on Friday and the blue-chip Dow touched record highs last week.
The recent run has lifted the S&P 500’s yearly gains to over 13%, with solid earnings especially from AI companies offsetting some concerns about high spending not yielding enough evidence of paying off.
J.P.Morgan raised its year-end target for the benchmark to 8,000 from 7,800, pointing to robust corporate earnings and increasing optimism that hyperscalers’ AI investments will accelerate revenue growth.
Of the 436 companies in the S&P 500 that have reported earnings to date for the June quarter, 85.1% have beaten estimates, according to LSEG data. The beat-rate stands well above the 67% seen in a typical quarter since 1994.
The earnings calendar thins out this week, with semiconductor company Applied Materials and networking equipment maker Cisco among the few reporting.
GameStop gained 2.4% in premarket trading after Bloomberg News reported CEO Ryan Cohen was considering pulling the company’s $56 billion bid for eBay.
U.S.-listed shares of Barrick Mining dropped 5.7% after missing second-quarter profit estimates.
Intel fell 4.6% after the chipmaker launched a $15 billion stock offering.
Apple was down 1.1%, as Jefferies downgraded the iPhone-maker’s stock to “underperform” from “hold”.
Separately, the U.S. Senate, led by Republicans, passed a temporary bill to fund federal agencies through December 11 on Saturday, averting a crippling shutdown weeks before the November midterm elections.
(Reporting by Avinash P and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)
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