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Meanwhile, megacap tech stocks were under pressure. Apple and Amazon declined 0.6% and 0.7%, respectively, as investors rotated out of growth names. AI-linked stocks, which had driven Monday’s market rebound, also showed signs of profit-taking.
Yields and Inflation Data Could Shift Fed Expectations
The bond market is adjusting its outlook, with traders pricing in the risk of prolonged higher yields. The 10-year Treasury yield remains elevated, reflecting concerns that tariff-driven inflation could delay rate cuts. Some strategists now see the 10-year yield potentially returning to 5% if inflation pressures persist.
The upcoming Consumer Price Index (CPI) report on Wednesday and Producer Price Index (PPI) data on Thursday will be key catalysts for markets. Any upside surprise in inflation readings could reinforce the Fed’s stance of keeping rates steady for longer.
Market Outlook: Powell’s Testimony and Inflation Data in Focus
With Powell’s testimony set to dominate market sentiment, traders will be looking for any signals on whether the Fed is considering adjusting its policy in response to tariffs and inflation risks. Additionally, upcoming inflation data will be closely watched for signs of persistent price pressures. While earnings season continues to drive individual stock moves, the broader market direction will hinge on the Fed’s policy outlook and economic data in the days ahead.
More Information in our Economic Calendar.
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