Inflation data and major tech earnings reports set to be released, as the market fluctuates between rate hike fears and easing geopolitical tensions

⑴ US stocks are entering a shortened trading week due to the holiday, as investors weigh concerns over inflation, uncertainty surrounding the Federal Reserve, and a series of major tech earnings reports. The Core PCE inflation report, set to be released on Thursday, will be in the spotlight. Economists expect an annualized reading of 3.3%, a level that may prompt policymakers to remain cautious.⑵ Deutsche Bank has pointed out that investors are increasingly pricing in the likelihood of future rate hikes rather than cuts. Federal Reserve Governor Waller warned that inflation is once again becoming a key driver for policy, and hinted that the Fed may need to abandon its accommodative stance. This shift has pushed US Treasury yields higher and dragged down rate-sensitive sectors, especially growth stocks.⑶ From a trading sentiment perspective, deVere Group analysts noted that if energy prices continue to decline, lower yields combined with softer energy prices will support the stock market. "Tech stocks could particularly benefit, as lower bond yields improve valuations for growth-oriented companies." Regarding this week’s earnings, Dell, Marvell Technology, Salesforce, Costco, and Snowflake will all release their results. Dell’s update on AI infrastructure demand following Nvidia’s earnings will be closely watched.⑷ On economic data, Wells Fargo expects the PCE Price Index to rise by 0.4% in April. While consumer spending remains resilient, it is likely to show increasing pressures from inflation and high borrowing costs. New home sales and initial jobless claims will offer clues as to whether higher rates are beginning to more significantly slow economic activity. Overall, the market remains caught between persistent inflation risks and expectations that easing geopolitical tensions could support a new round of risk rally.