U.S. stock index futures are expected to drop slightly on Tuesday, possibly leading to a calm trading session. Investors are focusing on upcoming important inflation data and the Federal Reserve’s policy announcement, which will happen next week.

Despite a volatile trading day, the S&P 500 and the Nasdaq reached their record closing highs on Monday. This was driven by the performance of Nvidia (NVDA.O) following its 10-for-one stock split.

In premarket trading, Nvidia dropped 0.3%, and Apple fell 0.4%. Investors seemed unenthusiastic about Apple’s waited AI strategy, which was revealed at the developer conference on Monday.

As the May Consumer Price Index report is released and the Fed’s policy meeting approaches, the market is preparing for potential market-moving developments. 

Even though no changes to interest rates are expected, the updated economic projections and “dot plot”. It will be closely watched due to mixed signals about the economy.

According to the CME’s Fed Watch tool, market prices have a 54.4% probability of the Fed’s rate cut happening in September. Analysts expect potential improvement in inflation data in the coming months, which could impact the Fed’s decisions.

The CME FedWatch Tool shows how likely the Fed will change interest rates based on market expectations. 

It uses the prices of futures contracts for fed funds on the CME to predict the chance of federal funds rate changes in real-time. 

This tool is helpful for investors who want to manage risk or protect themselves from changes in the Fed’s interest rate policy.

Given that Nvidia is the third-largest constituent of the S&P 500, its recent 262% rise in quarterly revenue has notably influenced market dynamics.

Looking ahead, the Producer Price Index data for May, import and export prices, and the first release of the University of Michigan’s Consumer Sentiment Survey are also due later in the week.

Other recent indicators include positive small-business confidence and hiring plans, even though the Uncertainty Index increased to a nearly four-year high due to the upcoming U.S. presidential election.