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The U.S. is printing its August inflation figures today!

Will the numbers support “peak inflation” speculations?

More importantly, will the release extend the S&P 500’s rally?

S&P 500 Index (SPX500): Daily

S&P 500 Index (SPX500) Daily Chart

S&P 500 Index (SPX500) Daily Chart

I don’t know if you’ve noticed but the S&P 500 U.S. stock index has closed its FOURTH consecutive trading session in the green after bouncing from the 3,900 support.

And why not? As you can see, 3,900 has been an area of interest since mid-May. It also lined up with an ascending channel support on the daily chart earlier this month.

Can the index extend its gains?

All eyes will be on the U.S. CPI release later today at 12:30 pm GMT.

Word around is that we’ll see the first decline in the headline CPI figure even as core inflation likely speeded up for another month.

Annualized inflation is also expected to slow for a second consecutive month, this time from 8.5% to 8.1%.

Watch out for the 4,150 – 4,200 mid-channel zone that’s also been a major inflection point for bulls and bears since late February 2022.

Weaker-than-expected figures would support speculations that U.S. inflation has “peaked” and that the Fed won’t be as hawkish in its next policy meetings.

S&P 500 could extend its daily rallies and hit the 200 SMA near 4,280 or its August highs just above 4,300.

Meanwhile, upside surprises would give the Fed license to keep tightening aggressively.

Keep in mind that higher interest rates could choke corporate profits and decrease consumer spending appetite.

Faster-than-expected inflation could weigh on U.S. equities and drag the stock index back to the 4,000 psychological level if not the channel support near 3,900.

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