Wall Street heads into a big week after a sharp selloff rattled investors, with inflation data, Apple's annual developer conference and the highly anticipated SpaceX initial public offering set to dominate market attention.
Stocks ended last week under pressure after a stronger-than-expected US jobs report fueled concerns that the Federal Reserve may need to keep interest rates higher for longer. The Nasdaq suffered its biggest one-day decline in a year on Friday, falling nearly 5%, while the S&P 500 snapped a nine-week winning streak.
The spotlight now turns to Wednesday's Consumer Price Index report, which is expected to show inflation accelerating in May. Economists forecast annual headline CPI to rise to around 4.2%, while core inflation is expected to edge higher to 2.9%. Thursday's Producer Price Index report will provide another gauge of price pressures facing the economy.
"A hotter-than-expected CPI release could trigger another selloff in stocks, while a cooler reading could see stocks bounce sharply,” said Kathleen Brooks, research director at XTB.
The inflation reports arrive after May payrolls increased by 172,000, well above expectations, reinforcing the view that the US economy remains resilient despite elevated borrowing costs. Deutsche Bank said the latest labor market data showed little evidence of deterioration and suggested Federal Reserve officials may become increasingly focused on inflation risks rather than employment concerns.
Rising inflation expectations have already prompted a dramatic shift in rate forecasts. Markets are now pricing in a meaningful possibility of another Fed rate hike before year-end, helping push Treasury yields sharply higher and weighing on high-growth technology shares.
Investors will also be watching Apple Inc (NASDAQ:AAPL, XETRA:APC)'s Worldwide Developers Conference, which begins Monday. The event is expected to feature updates to Apple Intelligence, Siri and the company's broader artificial intelligence strategy. With Apple facing increasing scrutiny over its AI progress compared with rivals, the conference could prove a key catalyst for the stock.
The technology sector will remain under the microscope throughout the week. Earnings from Oracle Corp (NYSE:ORCL, XETRA:ORC), Adobe Inc (NASDAQ:ADBE) and homebuilder Lennar Corp (NYSE:LEN) are expected to provide fresh insight into enterprise software demand and housing market conditions.
Meanwhile, capital markets are preparing for one of the largest public offerings in history. SpaceX is expected to begin trading on Friday after seeking to raise approximately $75 billion at a valuation approaching $1.8 trillion. The deal is widely viewed as a major test of investor appetite for high-profile growth companies following recent volatility in the technology sector.
Despite the market's recent pullback, Brooks said demand for the offering is likely to remain strong.
"Even with the selloff in tech, we still expect the SpaceX IPO later this week to generate much excitement," she said, adding that investors increasingly appear willing to buy into long-term growth themes rather than traditional business models alone.
With inflation concerns, interest rate expectations and major corporate events all converging, analysts say the coming week could help determine whether last week's market selloff proves to be a temporary pause or the beginning of a broader rotation away from technology and toward sectors expected to benefit from stronger growth and persistent inflation.