New data this week: inflation and the start of the reporting season

The U.S. stock market has been tight for the past few weeks, but it's not the limit. It’s expected to face even more difficulties, since today is the day of the publication of the key inflation report and the banks are starting a difficult reporting season.

Thursday's biggest event will be the announcement of the Consumer Price Index (CPI) and Friday will be the day of release of financial results from the major banks (JPMorgan, Citigroup and Wells Fargo).

The new CPI may become the new reflection of the Fed's seriousness about raising interest rates. It’s also noted that this is the Fed's most aggressive behavior towards the interest rate within 10 years. Moreover, the information may play an even greater role, since Friday's Labor Department employment report for September indicated that officials are still entitled to raise rates.

Bloomberg says the headline CPI for September is likely to slow year-over-year in August to 8.3% (previously 8.1%), but to rise for the month from 0.1% to 0.2%.  

The category of food and energy is excluded from the basic component, nevertheless all attention will be focused on it. According to economists, the basic CPI will grow from 6.3% to 6.5% over the year, but at the same time it will decrease from 0.6% to 0.4% in the month, which is August.

Other economic publications will be presented as well. They will assess the rate of price growth in the wholesale market. The producer price index, or PPI, will be used for the measurement. It determines the change in the prices that American manufacturers of goods and services will receive. Moreover, data on consumer spending in the face of continued inflation will be presented with a government report on retail sales, as well as research on consumer sentiment at the University of Michigan.

The 3rd quarter is likely to be marked by warnings about the state of some corporations' businesses from their executives, lower earnings per share estimates and more moderate results due to price and interest pressures.