A fresh wave of geopolitical clashes in the Middle East, coupled with rising concerns about energy-driven inflation spikes, weighed heavily on the S&P 500 Index (SPX) at the start of the week. However, recently released US CPI and PPI reports—which both came in better than expected—have turned things around, providing some support to the stock market.
June’s Core Consumer Price Index declined for the first time in months. The annual figure also dipped, hitting 2.6%. The Producer Price Index—another inflation gauge—confirmed this trend by losing 0.3% last month. Therefore, the likelihood of a Federal Reserve (Fed) rate hike in July has significantly dropped. This is a positive signal for the market: fewer inflation worries, easier monetary conditions, higher Treasury yields, and lower risk aversion.
The start of the earnings season is another catalyst. Major financial companies have reported better-than-expected results, thanks to strong trading activity, growth in commission income, and a pickup in the stock and bond markets. Total profits for the second quarter (Q2) are expected to surpass 23% year-over-year, with the technology sector playing a leading role. If upcoming reports from major companies confirm sustained growth and robust demand for artificial intelligence (AI) solutions, quotes could keep climbing toward new peaks.
On the technical side, SPX continues to rise, trading near historical highs. After a short-term pullback, the index managed to recover swiftly—a sign that buyer enthusiasm remains very much alive.
The final recommendation:
— Buy SPX at the current price of $7,550, targeting $7,650 within a week or two.
— Place a Stop Loss order at $7,500 to manage risks if the market plays against us.
This content is for informational purposes only and is not intended to be investing advice.
