Market Teeters on Inflation’s Threshold: What Wednesday’s CPI Data Could Signal

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The stock market trudged through Monday with little excitement, its progress hampered by rising Treasury yields. As the week progresses, all eyes will be on critical inflation data that could impact the Federal Reserve’s policy trajectory.

Futures Mixed as Treasury Yields Surge

Pre-market futures painted a mixed picture. The S&P 500 hovered near the flatline, while the Nasdaq 100 and Dow Jones Industrial Average posted modest gains of 0.1% and 0.04%, respectively.

Monday’s trading session ended in a similar fashion, with stocks slightly changed. The S&P 500 and Dow Jones Industrial Average both closed with marginal declines, while the Nasdaq 100 posted a small gain.

Eye on the Prize: Inflation Data and Fed Minutes

The key event of the week will be the release of the consumer price index (CPI) report on Wednesday. Economists predict a 0.3% increase in inflation during March, according to a survey by Dow Jones.

Anastasia Amoroso, iCapital’s chief investment strategist, cautioned investors about the potential impact of a surprise inflation figure. Higher-than-expected inflation could raise concerns about the effectiveness of the Federal Reserve’s policy.

Investors are also eagerly awaiting the release of the Federal Reserve’s minutes from its March meeting. These minutes will provide insights into the central bank’s deliberations and future monetary policy actions.

Rising Yields and Economic Data

Rising Treasury yields have played a role in market sentiment. A strong jobs report from last Friday signaled an improving economic outlook, contributing to the yield increase.

However, Amoroso sounded a note of caution, suggesting that further increases in the 10-year yield could become a concern. She believes that a break above 4.8% would warrant attention.

In addition to the CPI and Fed minutes, investors will also be watching the release of the National Federation of Independent Business’s small business survey results on Tuesday.

The upcoming week is packed with market-shaping events. As investors navigate the complexities of rising yields and anticipate key economic data, the direction of the stock market remains uncertain.