U.S. stock indices fell on Tuesday as investors awaited key U.S. labor market data and potential interest rate cuts in Europe and Canada this week.

Indices experienced volatility at the week’s start, as weak economic data depressed the Dow Jones Industrial Average, which lost about 115 points, or 0.3%, while falling bond yields helped the S&P 500 and NASDAQ Composite rise about 0.1% and 0.6%, respectively.

Speculation of a rate cut increases amid weak economic data

Purchasing managers’ index data for May indicated a slowdown in manufacturing activity for the second month in a row, and the reading came just days after U.S. gross domestic product data for the first quarter of the year was downgraded.

This weakness led to increased investor bets that the Federal Reserve will begin cutting interest rates by September, especially if inflation data due on Friday shows signs of stability.

This week, the focus is on Friday’s non-farm payroll data, a critical factor for the Fed when considering rate cuts.

Investors are concerned that an overly strong economy might prevent the U.S. central bank from lowering rates this year, or it might even necessitate rate increases. Although those concerns were alleviated the previous month, albeit temporarily, by data indicating a slowdown in inflation along with a cooling labor market.

The nonfarm payrolls report due Friday is expected to indicate that the U.S. labor market remains strong in May, with 185,000 new jobs, a small rebound from the previous month.

April JOLTS job openings will be released this Tuesday. 

The Federal Reserve will hold a meeting next week and may feel pressure from expected rate cuts from the European Central Bank and the Bank of Canada later this week. 

GameStop shows volatility, Tesla sales decline in China

On the corporate front, shares of GameStop experienced increased volatility before the market opened, possibly because stock market influencer Keith Gill was not selling his holdings despite Monday’s strong rally.

Illumina (ILMN) will also be in the spotlight after the genetic sequencing company made the decision to spin off its Grail oncology testing division.

Separately, Tesla’s (TSLA) sales of electric cars made in China fell 6.6% to 72,573 in May from a year ago, Reuters reported on Tuesday, citing data from the China Passenger Car Association.

Crude oil prices fell after OPEC meeting

Oil prices fell on Tuesday, extending losses from the previous session, after a group of major producers indicated an increase in supply later this year.

On Monday, both contracts fell more than 3% to their lowest level since early February.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, decided on Sunday to extend most of their oil production cuts until 2025, although they left room for eight members to phase out voluntary cuts.