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By Johann M Cherian and Bansari Mayur Kamdar

(Reuters) – Wall Street was set for a subdued open on Monday as investors stayed cautious ahead of a key inflation report, while weak data out of China fanned worries of a looming economic slowdown.

All eyes will be on U.S. inflation data this week that will feed into the Federal Reserve’s interest rate decision later in the month. A Reuters poll of economists showed they suspect that growth in consumer prices likely slowed in June.

“Energy prices and food prices at grocery stores have been coming down. So it (inflation) should still be little sticky in some parts, but moving in the right direction,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

“Investors are turning their attention to the earnings reports and the economic reports due during the week.”

The second-quarter earnings reporting period kicks off this week and investors will assess the impact of tight monetary conditions and fears of an impending economic slowdown on businesses.

Citigroup (NYSE:C) strategists downgraded U.S. stocks to “neutral”, adding that megacap growth is set for a pullback and U.S. recession risks could still bite.

Overall, earnings for the S&P 500 constituents are expected to fall 5.7% in the second quarter, Refintiv data showed.

On Friday, Wall Street’s main indexes ended the week lower after a mixed jobs report showed the domestic economy added fewest jobs in two-and-a-half years in June, although a decline in unemployment and higher-than-anticipated wage growth pointed to a still strong labor market.

Traders still expect the U.S. central bank to raise rates by 25 basis points later this month, but are divided on the rate hike trajectory for the rest of the year.

Big banks such as JPMorgan Chase (NYSE:JPM) and Citigroup inched up in premarket trading, ahead of reporting earnings on Friday. Investors expect the results to throw some light on the health of the lenders in the aftermath of the biggest crisis since 2008 earlier this year that pummeled the banking sector.

At 08:34 a.m. ET, Dow e-minis were up 25 points, or 0.07%, S&P 500 e-minis remained unchanged, and Nasdaq 100 e-minis were down 5 points, or 0.03%.

Meta Platforms added 1.1%, outperforming its megacap growth and technology peers. Brokerage Evercore ISI said Twitter’s turbulent execution has opened up an opportunity for a competitor app, and Meta has smartly taken advantage of that.

Ichan Enterprises jumped 16.4% after a report said Carl Icahn and banks have finalized amended loan agreements that untie the activist investor’s personal loans from the trading price of his firm.

U.S.-listed shares of Chinese automakers including Xpeng (NYSE:XPEV) and Li Auto fell over 2% each after China Association of Auto Manufacturers (CAAM) retracted a pledge over the weekend to avoid “abnormal pricing”.

Meanwhile, China’s producer prices for June fell at their fastest pace in over seven years, while consumer prices teetered on the edge of deflation, adding to concerns about the health of the world’s second-largest economy.