U.S. stock futures traded flat Thursday after record closes for the S&P 500 and Nasdaq. Investors await the July PPI report and weekly jobless claims, key indicators that could shape Federal Reserve rate cut expectations.

Stock Futures Slip Marginally as Markets Pause After Record Highs; Focus Turns to PPI and Jobless Claims

Stock Futures Slip Marginally as Markets Pause After Record Highs; Focus Turns to PPI and Jobless Claims

Market Snapshot: Thursday Morning Trading

U.S. stock futures hovered near the flatline early Thursday as Wall Street paused to digest its latest rally. By 6:30 a.m. ET, S&P 500 futures were down less than 0.1%, Nasdaq 100 futures dipped about 0.08%, and Dow Jones Industrial Average futures fell 3 points, or roughly 0.01%.

This modest pullback follows a strong two-day run that propelled the S&P 500 and Nasdaq Composite to fresh intraday and closing records. Both indexes have now achieved back-to-back record highs, fueled by cooling inflation data that has revived hopes for Federal Reserve interest rate cuts in September.

Market sentiment remains cautiously optimistic, but traders are positioning ahead of two critical pieces of economic data due later in the morning: the July Producer Price Index (PPI) and the latest weekly jobless claims.

Wednesday’s Record-Setting Session

On Wednesday, the S&P 500 closed up 0.32% at a new record level, while the Nasdaq Composite added 0.14% to secure its second consecutive all-time high. The Dow Jones Industrial Average outperformed both, gaining 463.66 points (1.04%) thanks to broad-based strength across industrial, financial, and consumer discretionary stocks.

The session’s gains extended Tuesday’s surge, which was sparked by a cooler-than-expected Consumer Price Index (CPI) report for July. That data suggested that inflationary pressures are easing faster than anticipated, raising the likelihood of monetary policy easing in the near term.

Catalyst: July CPI Data

The July CPI report showed inflation rising at a slower pace than economists forecast, with core prices—excluding food and energy—holding steady. Markets had been bracing for a potential upside surprise, but the data instead undershot expectations.

For investors, this was a signal that the Federal Reserve may soon have the flexibility to pivot from its restrictive stance. The probability of a September rate cut jumped in futures markets immediately after the release, according to CME FedWatch data.

While the CPI remains above the Fed’s 2% target, the pace of moderation is encouraging. Some analysts believe that with multiple inflation measures trending lower, the Fed may prefer to act sooner rather than later to avoid overtightening.

Economic Data Ahead: PPI and Jobless Claims

Thursday’s PPI report, due at 8:30 a.m. ET, is expected to show wholesale prices rising 0.2% month-over-month in July after holding flat in June. On a year-over-year basis, the index is projected to climb modestly, reflecting lingering cost pressures in certain sectors.

At the same time, the Labor Department will release jobless claims data for the week ended August 9. Economists expect claims to remain near historically low levels, signaling ongoing labor market resilience despite slower economic growth.

Any significant deviation from forecasts—especially a sharp rise in claims—could alter the market’s perception of economic momentum and Fed policy direction.

Federal Reserve Policy Outlook

The Fed’s next policy meeting concludes on September 18, and markets are currently pricing in a roughly 65–70% chance of a 25-basis-point rate cut. This would mark the central bank’s first easing move since the early stages of the pandemic.

Historically, the Fed has been cautious in shifting from a tightening cycle to an easing cycle, often requiring several months of consistent data to justify a change. However, the combination of cooling inflation, softening manufacturing activity, and geopolitical risks could accelerate the timeline.

Sam Stovall, chief investment strategist at CFRA Research, summed up the sentiment: “After yesterday’s ‘not as bad as it could have been’ July Consumer Price Index report, the equity markets are now in full ‘easing expectation’ mode. Even though Thursday’s Producer Price Index is projected to show increases, we think investors will overlook them.”

Corporate Earnings in Focus

Earnings season continues to provide stock-specific catalysts.

• Cisco Systems (CSCO): Shares slipped more than 2% in extended trading Wednesday despite the company delivering fiscal Q4 results that narrowly topped analyst expectations. Investors appeared concerned about forward guidance and macroeconomic headwinds.
• Deere & Co. (DE): The agricultural machinery giant is set to report before Thursday’s opening bell. Analysts expect earnings to reflect steady demand but also margin pressure from rising input costs.
• Tapestry Inc. (TPR): The Coach and Kate Spade parent will also release results pre-market, with Wall Street watching for signs of resilience in high-end consumer spending amid shifting retail trends.

Sector Performance Analysis

Technology: Megacap tech stocks have been central to the 2024–2025 rally, with Apple, Microsoft, and Nvidia continuing to attract institutional inflows. However, valuations remain stretched, making them vulnerable to earnings disappointments.

Industrials: Strong performance in machinery, aerospace, and logistics names has supported the Dow’s recent gains. Investors view the sector as a beneficiary of infrastructure spending and supply chain reshoring.

Financials: Banks have rallied on the prospect of lower rates boosting lending activity, though net interest margin compression remains a concern.

Consumer Discretionary: Luxury goods and travel names continue to outperform, reflecting pockets of robust consumer demand despite broader economic slowing.

Historical Comparisons: Record High Streaks

The S&P 500 has achieved multiple streaks of record highs in past bull markets, often followed by periods of mild consolidation before further gains. Data from the last 50 years shows that when the index posts consecutive record closes after a multi-month rally, the average 3-month forward return is positive—but volatility tends to increase.

The current setup bears similarities to 2017, when low inflation and accommodative monetary policy supported steady equity gains with limited drawdowns.

Global Market Context

Asian markets were mixed overnight, with Japan’s Nikkei 225 up 0.4% while China’s Shanghai Composite fell 0.3% on weak economic data. European markets opened cautiously higher, with the STOXX 600 gaining 0.2% in early trade.

In currency markets, the U.S. dollar index edged lower, reflecting reduced rate hike expectations. Treasury yields were steady, with the 10-year yield hovering near 4.05%.

Outlook for the Rest of the Week

Markets will remain data-sensitive heading into Friday, when the University of Michigan’s consumer sentiment index is due. Next week brings additional housing and manufacturing reports, which could further inform the Fed’s September decision.

From a technical perspective, the S&P 500 faces near-term resistance at 5,550, with support around 5,450. A break above the resistance level on strong volume could open the door to further gains into late August.