Twice a year, the head of the Federal Reserve provides an update to Congress and then answers questions from lawmakers. During this week's testimony to the Finance Committee, Fed Chair Powell reinforced the investor outlook for a rate cut at the next meeting on July 31. According to Powell, second quarter U.S. economic growth "appears to have moderated" and potential risks include slowing business investment, uncertainty about global economic activity, and trade tensions. He said that the Fed will "act as appropriate" to sustain the current expansion. Overall, his comments were in line with expectations, and the main question for investors going forward is whether there will be additional rate cuts later in the year.

Looking ahead, Retail Sales will be released on Tuesday. Since consumer spending accounts for about 70% of all economic activity in the U.S., the retail sales data is a key indicator of growth. Industrial Production, another important indicator of economic growth, also will come out on Tuesday. Housing Starts will be released on Wednesday. In addition, news about the trade negotiations may influence mortgage rates.