Small business optimism, consumer prices, Home Depot: 3 things to watch

Investing.com -- Stocks were rising on Monday as investors anticipate new data on inflation ahead of Wednesday's decision on interest rates by the Federal Reserve.

The futures market is putting the probability of a pause on rate hikes this week but perhaps not in July as the Fed takes a step back to consider how well its actions to date have worked to cool inflation. Tuesday's consumer price index for May is coming just in time for the Fed to make its decision, amid other data showing price growth slowing.

With earnings season largely in the rearview mirror, investors are optimistic that a Fed pause could boost big tech and other stocks, lifting the S&P 500 out of a bear market in the past few days.

Stocks could get a further catalyst if inflation data comes in as or better than expected and the Fed does pause. Also expected on Wednesday, a new set of the Fed policymakers' outlooks on inflation, economic growth, unemployment and other data for the next few months.

Here are three things that could affect markets tomorrow:

1. Small business optimism

The NFIB Small Business Optimism reading for May is due out at 6:00 ET (10:00 GMT). Analysts are expecting a reading of 88.5 versus 89 in the prior reading.

2. Consumer prices

The CPI is due out at 8:30 ET. Analysts expect prices for May to rise 4.1% over the year and 0.2% for the month. Core prices, which strip out volatile food and energy, are expected to rise 5.3% for the year and 0.4% for the month.

3. Home Depot

Home improvement retailer Home Depot Inc (NYSE:HD) is scheduled to hold its investor and analyst day on Tuesday amid a continued tough housing market, as consumers pull back their do-it-yourself project spending.