U.S. Stock Futures Drop as Investors Digest Jobs Report, Look to Inflation Data

U.S. stock futures dropped lower on Monday as investors digested the latest jobs report and braced for inflation data due Wednesday—with economic signals painting a picture of both a slowing economy and higher interest rates ahead.

Futures for the Dow Jones Industrial Average retreated 40 points, or 0.1%, after the index shed 187 points last Friday to finish at 33,734. S&P 500 futures lost 0.3% with contracts tracking the tech-heavy Nasdaq down 0.4%.

Last Friday’s jobs report showed that hiring is beginning to ease, raising the prospect of a slowing economy at a time when the Federal Reserve remains on track to keep raising interest rates to bring inflation down from a multi-decade high.

While the jobs report flashed a warning on growth, the fact that earnings growth was steady reaffirmed expectations that the Fed will hike rates next week, though the June consumer-price index (CPI) print represents key inflation data due before then.

“Caution dominates ahead of the key inflation reading on Wednesday. Given the widely expected interest-rate hike next week, and Friday’s jobs data showing earnings growth remaining steady, investors will be looking out for signs that core prices are staying stubborn,” said Susannah Streeter, an analyst at broker Hargreaves Lansdown. “That could lead to a fresh bout of nervousness, given it could indicate higher rates will linger for longer.”

Investors will have more to chew on in the run up to Wednesday’s CPI data, with a spate of officials from the Fed due to speak in the day ahead.