U.S. stock futures start August on the back foot after five-month winning streak

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U.S. stock futures on Tuesday pulled back from 16-month highs as caution prevailed after a five-month winning streak. On Monday, the Dow Jones Industrial Average DJIA, +0.28% rose 100 points, or 0.28%, to 35560, the S&P 500 SPX, +0.15% increased 7 points, or 0.15%, to 4589, and the Nasdaq Composite COMP, +0.21% gained 29 points, or 0.21%, to 14346. What’s driving markets Markets were starting August in cautious mood, taking a breather after recording a five-month winning streak, the best such run in two years. News out of China — where reports showed factory activity contracting, home sales plunging and Country Garden 2007, -7.59% , one of the biggest property developers, abandoning a share placement — was suppressing risk appetite, lifting the U.S. dollar DXY, +0.28% and pushing lower the prices of industrial commodities such as oil CL.1, -0.53% and copper HG00, -0.77% . Still, the S&P 500 SPX, +0.15% closed Monday at a 16-month high having gained 19.5% so far in 2023 as investors welcomed cooling inflation and hope that the Federal Reserve can soon stop interest rate rises having not badly damaged the U.S. economy. The Fed may need to see evidence of easing inflationary pressures emanating from the labor market and so investors will be keenly eyeing jobs data over the rest of the week. The JOLTS job openings report for July will be published on Tuesday at 10 a.m. Eastern, followed on Wednesday by the ADP private sector jobs reports, the weekly initial unemployment claims on Thursday, and the nonfarm payrolls report on Friday. “The current economic conditions, including decreasing inflation, a pause in Federal Reserve tightening, and steady or increasing growth, could create an ideal situation for the stock market. For a while now, the market has responded positively to the idea of a smooth transition to a stable economic environment,” said Stephen Innes, managing partner at SPI Asset management. Other U.S. economic updates set for release on Tuesday include the S&P manufacturing PMI for July, due at 9:45 a.m., and the ISM manufacturing report for July, alongside June construction spending at 10 a.m..