Debate Drama and Inflation Jitters: A Cautious Friday for U.S. Markets

Stock markets are cautiously optimistic as the week winds down! On Friday, the Dow futures are inching slightly higher by 0.1%, following a small gain yesterday. The S&P 500 and tech-heavy Nasdaq are looking even better, with futures contracts up 0.3% and 0.4% respectively.

It's been a fantastic first half of the year for investors, with the S&P 500 nearing record highs and already up 15% year-to-date. The Nasdaq is even more impressive, surging almost 19% since January. But before everyone pops the champagne corks, a key inflation report looms large today.

Here's the wrinkle: the Federal Reserve is super focused on inflation, and their decisions about interest rates depend heavily on it. This afternoon's personal consumption expenditures (PCE) price index report is the big one to watch. Economists are hoping for some cooling down, which could lead to the Fed potentially cutting rates in September. That's why "all eyes are on" this report, as one analyst put it.

Adding a layer of complexity, yesterday's fiery debate between President Biden and Donald Trump has stirred the pot. Apparently, the market perceived Trump as the stronger contender, causing interest rates to bounce back a bit.

So, the market is holding its breath for the inflation data. Will it be a happy ending to a stellar first half, or will it throw a wrench into the party? Buckle up, investors!