Here are the 2 big things we're watching in the stock market in the week ahead

Breaking news from the markets: Inflation data for July takes center stage in the week ahead, as second-quarter earnings season winds down. Another factor that could influence the market action: updates on the Iran war. Though Treasury Secretary Scott Bessent said early last week that a deal may be coming , that news never materialized.

That's not to say a deal won't happen, but the market is likely going to need some further confirmation that progress is being made in order to sustain its Bessent-fueled optimism . Now, let's preview the big economic reports of the week and the lone Club earnings release from Cardinal Health . Inflation data: The consumer price index (CPI) and producer price index (PPI) reports for July are due out Wednesday and Thursday, respectively.

Economic Details

The CPI represents what consumers pay and is therefore a higher priority for the Federal Reserve. But the PPI measures the prices that producers receive for their goods at several stages in the supply chain. As a result, whereas the CPI is considered a lagging indicator, the PPI is considered a leading indicator because if companies are paying more for their inputs, they may look to pass those higher costs down the road.

Those higher prices for consumers would, eventually, show up in the CPI. As of Friday, economists are looking for a 3. 5% year-over-year gain for the headline and core CPI, respectively, according to FactSet.

The core index removes volatile energy and food prices. For the wholesale PPI, economists are expecting a 0. 1% month-over-month gain at the headline level, and a 0.

Analyst Views

3% monthly gain at the core level. Much of the conversation around this year's rekindled inflation has been about the war-driven rise in energy prices, which makes sense given it's a major input cost across economic sectors. But we also cannot ignore other potential drivers that may prove more durable than the spike in oil prices.

One such source of inflationary pressure: the AI data center buildout. Indeed, Fed Governor Lisa Cook spoke about this at The Exchequer Club of Washington in July. In addition to calling out the Iran war and its resulting impact on energy prices, she noted the AI capex cycle "has caused significant price increases for chips, other high-tech equipment, software, and utilities.

" Of course, those are only a fewer examples. These data centers also require a ton of copper (a common building material for other projects), gobble up an insane amount of energy (at a time when supply is under pressure), and lead to tons of jobs (which is fantastic, but we have to be mindful that more folks at work and wage gains are inflationary as more dollars are available to chase the same goods). As a result of the combination of these two forces, Cook said, "I see a notable shift in the balance of risks relative to a year or so ago, with inflation risks now outweighing employment risks.

Financial markets are tracking the development closely as investors assess the likely impact.