The S&P 500 Index (SPX) is currently hovering at $7,715, sitting just a fraction away from its mid‑August all‑time high. Of course, there is some localized heat, though the medium-term view still looks solid. The index is up about 13% year-to-date, and strong earnings are doing most of the heavy lifting. However, last week was a stark reminder of how volatile this market gets when the US Federal Reserve (Fed) comes into play. On September 3, SPX jumped over 1% when the likelihood of monetary tightening dipped—only to drop roughly 0.5% the next day when a red‑hot jobs report flipped the script.
What made the print so impactful? August's labor market figures were nothing short of stunning: the American economy added 162,000 positions, far surpassing the forecasted 56,000, while unemployment held steady at 4.1%. Traders wasted no time repricing, pushing the odds of a 25‑basis‑point Fed hike on September 16 to around 60%. Now, the spotlight shifts to inflation. The Producer Price Index (PPI) drops on Thursday, followed by the Consumer Price Index (CPI) on Friday. Consensus estimates predict a 0.4% monthly increase in headline inflation and a 0.2% rise in core readings. If the data come in on the softer side, they could pour cold water on rate hike expectations and give US stocks a new spark.
But there is a wildcard that may overshadow all of this: the national bond market. The 10-year Treasury yield is near 4.8%, having recently reached its highest level since January 2025. A push toward the psychologically critical 5% threshold could heap pressure on tech stock valuations and further tip the scales in favor of bonds over equities.
The final recommendation:
— Buy SPX at the current price ($7,715), aiming to reach $7,815 within one month.
— To keep risk in check if the market moves against us, place a Stop Loss order at $7,650.
This content is for informational purposes only and is not intended to be investing advice.
