Yesterday’s U.S. CPI report matched the expectations, confirming a 25 basis point rate cut likely happening next week, with odds estimated at 97%. Following this, the S&P 500 saw a strong rally. This was mainly because there were fears of the data being higher than anticipated, and with the release now behind us, the market pulled back from prior hedges.
Broadly speaking, market projections remain stable, anticipating approximately three rate cuts by the conclusion of 2025. At this point, more compelling evidence of accelerating inflation would be needed to rule out these predicted cuts. For the moment, conditions seem favorable for further market gains.
Looking ahead to 2025, Trump’s policies could bolster growth and, coupled with the Fed’s ongoing easing stance, growth is anticipated to stay positive. The most recent updates from the Atlanta Fed GDPNow indicator already hint at such acceleration.
However, the key challenge in 2025 could be inflation and how the Federal Reserve responds. At present, their stance suggests that a robust economy would merely slow down the easing process rather than initiate a tightening—something that should continue to support the stock market.
Should the Fed shift their approach towards potential tightening, it might provoke a significant market correction due to anticipated economic slowdown. For now, investors are likely to continue seeing market dips as buying opportunities.
### S&P 500 Technical Analysis – Daily Timeframe
Examining the daily chart, we notice the S&P 500 rebounded around the 6053 mark, pushing further upward following the U.S. CPI data release. Buyers appear intent on aiming for new all-time highs, whereas sellers would prefer the price dipping below 6053 to set the stage for a decline towards the major trendline, situated around 6000.
### S&P 500 Technical Analysis – 4-Hour Timeframe
On the 4-hour chart, the recent price movements are more visible, showing a bounce off the 6053 level and a subsequent rise post-CPI release. Sellers may begin asserting pressure around the 6111 high, eyeing a pullback to 6053, while buyers will likely be looking to push past this level to enhance bullish positions aiming for new heights.
### S&P 500 Technical Analysis – 1-Hour Timeframe
Focusing on the 1-hour chart, there’s a notable zone around 6075 where price has frequently reacted over the past few days. If there’s a retreat to this level, buyers might get involved with a risk management plan below this zone, betting on a rally towards new highs. Conversely, sellers could aim for a breach beneath this level to target a drop to 6053. The red lines highlight today’s average daily range.
### Upcoming Catalysts
Today, keep an eye on the latest U.S. jobless claims numbers and the U.S. PPI report, which could serve as key market-moving events.
