US stocks opened the week on a cautious note on Monday, with the major averages hovering near the flatline after recent gains.
Traders shifted focus to a slate of retail earnings and commentary from the Federal Reserve later this week.
The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite were all little changed in early trading, cooling off after two consecutive winning weeks.
The S&P 500 and Nasdaq have now advanced in four of the past five weeks, while small-cap stocks led last week’s rally on expectations of lower interest rates ahead.
Attention is also turning to retail giants, with Home Depot, Lowe’s, Walmart, and Target set to report results this week.
Investors are looking to these earnings for signals on the resilience of consumer spending amid a shifting rate environment.
The Federal Reserve remains at the centre of market sentiment, with Chair Jerome Powell scheduled to speak at the Jackson Hole economic symposium later this week.
Fed funds futures currently imply nearly an 85% chance of a rate cut at the central bank’s September policy meeting, according to CME’s FedWatch tool.
Analysts raise S&P 500 target
Wells Fargo’s Investment Institute raised its year-end forecast for the S&P 500, citing relief from the US decision to delay many of the tariffs announced earlier this year.
The bank now expects the index to finish 2025 in the 6,300–6,500 range, with a midpoint target of 6,400.
That’s higher than strategist Darrell Cronk’s previous call of 5,900–6,100.
In a note to clients on Friday, Wells Fargo said the softer tariff schedule should ease pressure on corporate earnings and consumer spending through the rest of the year.
“We believe delayed tariff increases will mitigate this year’s US economic growth slowdown and extend the soft patch into early 2026,” the firm wrote.
The bank added that while frontloaded tax cuts and deregulation will lift activity in early 2025, the staggered tariff rollout will temper inflationary effects until later in the year and into 2026.
The Ukraine-Russia peace deal
President Donald Trump’s summit with Russian President Vladimir Putin in Alaska on Friday concluded without a ceasefire, but US officials insisted progress had been made.
Steve Witkoff, the US special envoy, said Putin had agreed to allow the US and European allies to extend “Article 5-like protection” to Ukraine, a reference to NATO’s collective defence clause.
The move, if formalised, would mark a significant shift in security guarantees for Kyiv.
Still, Secretary of State Marco Rubio cautioned that a comprehensive peace deal remained elusive, saying an agreement was “still a long way off.”
Attention now shifts to Washington, where Trump is scheduled to host Ukrainian President Volodymyr Zelenskyy on Monday, alongside several European leaders, for further discussions on the war and potential security arrangements.
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