Key takeaways:

• The Federal Reserve is expected to hold interest rates steady for the first time since it began its rate hike cycle

With the S&P 500 now technically in a bull market, investors' conviction will be tested when fresh US inflation data lands and the Federal Reserve holds its latest meeting.

Economic Calendar and News

The United States is at the centre of the week most important economic news and developments.

On Tuesday, US-time, the Labor Department will publish the latest Consumer Price Index (CPI) for May. According to market estimates, CPI is expected to have risen 0.2% last month, which would be a decrease compared with the 0.4% movement a month prior. On an annual basis, economists believe the annual rate will come in at 4.1%, a marked slowdown versus 4.9% last time around.

In terms of core CPI, which strips out food and energy prices, consensus figures suggest we may get readings of 0.4% month-over-month, and 5.3% year-over-year. Back in April the annual reading was 5.5%, suggesting inflation remains extremely sticky among core goods.

Meanwhile, the Producer Price Index (PPI), which tracks wholesale inflation, will follow on Wednesday. Producer prices are tipped to have decreased 0.1% in May after a 0.2% gain back in April, and the annual rate is expected to have slowed to 1.5% versus April reading of 2.3%.The biggest event this week is none other than the Federal Reserve Federal Open Market Committee (FOMC) meeting. That will result in another decision on interest rates. 

Over the last ten meetings, the Fed has raised rates on every occasion in an effort to tame inflation. As it stands, the federal funds rate is 5% to 5.25%, but markets are expecting the Federal Reserve to pause its interest rate hikes for the first time since it began its rate hike cycle.

One of the other key events in the US this week will be an update on retail sales, due Thursday. According to futures markets, US retail sales probably rose by 0.5% last month, and after an increase of 0.4% in April. Last time around it was an increase in online shopping and food that prompted growth, so observers will be looking at momentum across these categories.Switching the focus back to the local economy, and May jobs report will be released on Thursday. The national unemployment rate is likely to remain steady at 3.7%, at least according to preliminary insights, thanks to a modest uptick in both the participation rate and number of jobs added to the economy.Elsewhere, look out for Australian consumer confidence and business confidence data, while China will release industrial production and retail sales reports on Thursday.

Stocks on watch

Fresh off a 11-day winning streak, electric vehicle manufacturer Tesla (NASDAQ: TSLA) is sure to be one of the most watched names over the coming days. Approaching a record run, the company shares have increased by one-third over that period, taking the stock to an eight-month high in the process. 

Shares in electric vehicle manufacturers have caught a bid lately amid the strength of the Nasdaq rally. There is some optimism that Tesla deliveries and registrations in the key market of China have increased significantly versus a year ago, with that trend potentially improving over recent weeks. Furthermore, investors have also responded favourably to a new fast-charging deal with a major US auto manufacturer, which entrenches Tesla North American Charging Standard (NACS).

Over recent weeks software giant Adobe (NASDAQ: ADBE) has been supported by the strong interest in artificial intelligence (AI). The stock is up more than 30% over the last month, whereas the S&P 500 is up just 4% in that time. The company will report quarterly earnings this week, with Wall Street expecting revenue of approximately US$4.8 billion, and earnings per share of US$3.79. 

The key area of focus for the company earnings will be commentary around AI, which in some quarters is viewed as a tailwind for established platforms like Adobe features across its stable. Just a week ago the company unveiled Sensei GenAI, a generative AI tool, which it has released across Adobe Experience Cloud applications for enterprises. 

Oil prices continue to retreat, with demand concerns weighing on the price of the commodity. Furthermore, there were reports that Saudi Arabian oil giant Aramco is pledging to supply full crude oil volumes to Asian refiners, despite the country pledge to push ahead with a production cut on its own. 

Weakness in the oil market could have an impact on names like Woodside Energy (ASX: WDS), Beach Energy (ASX: BPT), Santos (ASX: STO), Exxon Mobil (NYSE: XOM), BP (NYSE: BP), and Occidental Petroleum (NYSE: OXY), among others.

On a related note, the iron ore segment could face some stiff pressure at the start of the new trading week. For the first time in nine sessions the price of the key steel-making ingredient declined after Goldman Sachs warned weakness in China property market could weigh on growth in the world second largest economy for years. 

With iron ore down around 4%, investors will be assessing that warning against the Chinese government efforts to revive the nation stalled economic recovery, including hopes of policy directed specifically at the property market. Iron ore stocks on watch include Fortescue Metals Group (ASX: FMG), BHP (ASX: BHP), Rio Tinto (ASX: RIO), and Mineral Resources (ASX: MIN), to name a few.SelfWealth Ltd ABN 52 154 324 428 (Selfwealth) (AFSL 421789). The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser and/or accountant. Taxation, legal and other matters referred to on this website are of a general nature only and should not be relied upon in place of appropriate professional advice.