Stock Markets Brace for Strong Move as US CPI Print Looms

Stock investors are bracing for potentially strong moves and choppy trading Thursday after the release of the first US inflation data this year, based on the pattern of recent months.

(Bloomberg) — Stock investors are bracing for potentially strong moves and choppy trading Thursday after the release of the first US inflation data this year, based on the pattern of recent months. 

In November and December, CPI came in 20 basis points lower than economists had forecast and the market rallied on both occasions, yet last time the S&P 500 pared gains of as much as 2.8% during the regular trading session to end the day just 0.7% higher.

With consensus leaning toward the view that peak inflation has passed, the focus is increasingly shifting toward how low inflation might need to go before central banks are willing to stop raising rates and potentially even aid markets in a recession.

The S&P 500 and Stoxx Europe 600 Indexes both posted daily gains in each of the past three months following the CPI data, and in four of the past five. Prior to that, there had been a run of mainly negative market reaction amid mounting signs of monetary tightening.

Stocks in Europe were lower today, as were US equity futures, after two Federal Reserve officials said Monday that the central bank will likely need to raise interest rates above 5% before pausing and holding for some time.

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