The stock market began the week cautiously, with traders sifting through remarks from a slew of Federal Reserve speakers while anticipating key inflation data and the start of earnings season.

Following a three-day decline, the S&P 500 posted a small gain. The market received little support from the megacap space, as Tesla fell nearly 2% and Amazon fell ahead of its Prime Day event. The Nasdaq 100, which had a historic first half of the year amid the AI craze, will undergo a "special rebalance." Following news of a plan to increase capital requirements, a gauge of large banks pared gains.

In the run-up to Wednesday's consumer price index, the market heard from a slew of policymakers. Three Fed officials, Michael Barr, Mary Daly, and Loretta Mester, have stated that the central bank will need to raise interest rates further this year in order to return inflation to its 2% target. Meanwhile, Fed Bank of Atlanta President Raphael Bostic stated that officials can be patient in the face of signs of an economic slowdown.

Since equities made a strong first-half rally, market momentum has slowed as concerns about the impact of the many economic crosscurrents on corporate profits have resurfaced. Morgan Stanley's Michael Wilson is the latest to warn that, given elevated equity valuations, higher interest rates, and dwindling liquidity, earnings forecasts will matter more than usual this time around.