Benchmark indices on Wall Street failed to build on last week’s comeback rally, enduring a choppy trading session ahead of some key inflation data.

The S&P 500 ended at the absolute flat line, while the Nasdaq Composite ended with gains of 0.2%. The Dow Jones ended up shedding close to 0.4% in regular trading. Futures in after hours trading are also flat.

Investor focus has now shifted to the pair of inflation data scheduled to be reported over the next two days. Both Consumer and Producer Price Inflation data could give some direction to an uncertain market after volatility seen last week post the disappointing jobs report, unwinding of the Yen carry trade and geopolitical factors.

The Producer Price Index, a measure of the wholesale prices will be released first on Tuesday and is expected to show a monthly increase of 0.2% in July, in-line with that seen in June, according to consensus estimates from Dow Jones.
Data for the Consumer Price Index is scheduled to be released on Wednesday and is likely to see an increase of 0.2% from last month, higher than a drop of 0.1% in June. Retail sales data will be released later this week.

To Solita Marcelli at UBS Global Wealth Management, it’s a good time for investors to “take stock” of how far key markets have moved.

“Volatility could return this week,” she said. “If inflation is too low, this may heighten concerns that the US may be heading for a recession. If inflation is too high, it could encourage fears that the Federal Reserve may be unable to cut rates quickly enough to protect the economy. Geopolitical risks also remain elevated.”

Cboe Global Markets Inc. acknowledged that thin trading premarket played a role in the VIX’s violent move last Monday — but said its surge was justified by the mounting angst over the contagion risk emanating from a crash in Japanese currency and stocks, which led to the yen carry-trade unwinding.

“When the world feels uneasy, people feel less inclined to take risks,” said Callie Cox at Ritholtz Wealth Management. “But fear can be a healthy dynamic for a market that thrives on clearing low hurdles. When it turns out that bad news isn’t as bad as people think, they pile back in.”

(With Inputs From Agencies.)