Wednesday's monthly US consumer price index will reveal the latest data on inflation trends, a key concern for investors. A survey of more than 4,000 traders released this week showed that inflation and tariffs are the factors which are expected to have the biggest impact on markets this year. According to the results of a Reuters survey, the January report is expected to show a 0.3% month-on-month increase in CPI.
The pace of inflation will be a challenge for the US stock market as investors are concerned that President Donald Trump's tariff agenda is jeopardizing Wall Street's hopes for lower interest rates this year.
The new tariffs are seen as inflationary, making things difficult for the Federal Reserve (Fed). The central bank paused its rate-cutting cycle last month, waiting for more evidence of fading inflation to continue easing monetary policy further.
Markets estimate an over 80% chance that the Fed will keep rates unchanged at its next meeting in March, with about two rate cuts expected by the end of the year. Expectations that the Fed's policy will remain unchanged in March intensified after a mixed US employment report on Friday. Job growth slowed more than forecast in January, but the 4% unemployment rate showed signs of a healthy labor market.
Corporate earnings reports will also be in the spotlight next week, with data expected from Coca-Cola, Cisco and McDonald's.
According to LSEG IBES, with more than half of the companies in the S&P 500 Index having already reported, earnings for the fourth quarter are expected to rise by 12.7% year-on-year, up from the expected 9.6% increase in early January.
The overall recommendation is to buy the S&P 500 on the condition that the US CPI (month-on-month) will be under 0.3%.
Profits should be taken at the level of 6,2000. A Stop loss could be set at the level of 5,950.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
