The short-term direction for stocks hinges on Wednesday’s inflation report, and JPMorgan detailed the market’s reaction to the different data. The Bureau of Labor Statistics will release the closely watched Consumer Price Index data for December at 8:30 a.m. ET. According to a Dow Jones survey of economists, both the headline and core data (the latter excluding food and energy) are expected to rise 0.3% monthly, with annual inflation rates at 2.9% and 3.3% respectively. JPMorgan’s trading desk views the monthly core CPI data as the most critical and breaks down how the S&P 500 might move based on that data. The country’s largest bank said the base case is for core CPI to be between 0.17% and 0.23%, which could lead to a knee-jerk S&P 500 gain of between 0.25% and 1% at 0.10 if the inflation data is much lower than expected. % Within a 0.17% gain range, the S&P 500 could rise between 1% and 1.5%. “This mild outcome is likely to be achieved through a combination of cooling household inflation and an increase in core commodity deflationary impulses,” the Wall Street firm said. If core CPI is between 0.23% and 0.30% in December, it may The S&P 500 index fell 0.75% to 1.25%. ,” JPMorgan said. The key inflation data may influence the Fed’s interest rate policy this winter. Although market pricing overwhelmingly points to the central bank keeping its benchmark lending rate steady at 4.25% to 4.50% at this month’s Fed meeting %, but Chairman Powell is still likely to lay the groundwork for changes in interest rates later this year at a subsequent press conference.
