Markets Slip as CPI Report Looms and Fed Rate-Hike Bets Build

U.S. stocks closed lower Monday and futures pointed to further weakness Tuesday morning as investors braced for the June Consumer Price Index report, due at 8:30 a.m. ET. The Dow fell 0.3% to 52,498.70, the S&P 500 lost 0.8% to 7,515.47, and the Nasdaq dropped 1.6% to 25,873.18, pressured by rising oil prices and escalating U.S.-Iran tensions in the Strait of Hormuz.

While economists expect the report to show consumer price inflation cooled in June, bond traders have been moving the other way, increasing bets that the Federal Reserve will raise interest rates at its July 28-29 meeting. That shift has weighed most heavily on rate-sensitive technology shares, with the Information Technology sector falling 2.1% Monday while Energy rose 3.2%.

The CPI print will set the tone for a busy week that also includes the start of second-quarter bank earnings season. A hotter-than-expected reading would likely cement rate-hike expectations and extend pressure on growth stocks; a cool number could offer the broader market some relief.