Nasdaq Index, Dow Jones, S&P 500 News: Wall Street on Alert for CPI Report, Impact on Fed Policy

S&P 500 Futures Edge Up

As traders await a crucial inflation report, S&P 500 futures experienced a slight rise on Tuesday, setting the stage for potential market movements. These developments come amid heightened sensitivity to inflation data and its implications for the Federal Reserve’s monetary policy.

At 12:09 GMT, blue chip Dow Jones futures are trading 39213.00, down 21.00 or -0.05%. Benchmark S&P 500 Index futures are at 5196.25, up 10.50 or +0.20% and tech-weighted Nasdaq-100 Index futures are trading 18292.25, up 76.00 or +0.42%.

CPI Expectations and Market Implications

The focus now turns to the February consumer price index (CPI), anticipated for release at 12:30 GMT Predictions suggest a 0.4% monthly increase and a 3.1% year-over-year rise. The January CPI surge had led to a more cautious approach by Fed officials concerning policy easing. With the expectation of hot CPI figures in February, driven by higher gasoline prices, yet possibly balanced by a slower core inflation, the market remains on edge.

Potential Market Reactions

JPMorgan analysts outline two primary scenarios based on the CPI report. A lower-than-expected rise (0.2%-0.3%) could potentially uplift the S&P 500, encouraging shifts towards more cyclical or value sectors. In contrast, a CPI rise within the 0.3%-0.4% range might trigger concerns about resurging inflation, potentially leading to a decline in the S&P 500.

Stock Market Outlook

Recent trends show a cooling in the technology-led market rally. Significant players like Nvidia, Apple, Alphabet, Microsoft, and Tesla have seen notable pullbacks. This recalibration suggests a shift from mega-cap tech stocks to a broader market composition, implying more consolidation and modest returns in major market-based indexes.

Short-Term Market Forecast

Considering the upcoming CPI report and recent tech stock performances, the market appears poised for cautious optimism. However, any significant deviation in CPI figures from expectations could prompt notable movements. The short-term outlook remains cautiously bullish, contingent on CPI data aligning with market expectations of gradual inflation moderation.

Technical Analysis

The main trend is up according to the daily swing chart. A trade through 5257.25 will signal a resumption of the uptrend. A move through 5126.00 will change the short-term trend to down. This could trigger an acceleration to the downside with the 50-day moving average at 5022.89 the next major target.

On Friday, the index also posted a potentially bearish closing price reversal top. This chart pattern was confirmed earlier today. This chart pattern typically leads to a minimum 2 to 3 day correction. It doesn’t mean the trend has changed, but it does signal that the selling is greater than the buying at current price levels.