S&P 500 – Talking Points
- S&P 500[1] slowly creeps higher toward 3900
- US CPI data on Wednesday comes into focus
- BoC rate[2] decision, PPI, & consumer sentiment data also on tap
The S&P 500 advanced on Tuesday as traders eagerly away Wednesday’s US CPI print. Following a tough Monday session that was dominated by recession fears, equities pushed higher Tuesday with financials and materials leading the way for the S&P 500. Bank earnings kick off, which will garner significant attention. Commentary from bank CEOs on the state of the economy may set the mood as we push ahead to retail earnings later in the month, which may prove to be the catalyst for the next major move in equities. XLE, the energy sector ETF, was trading down 2% as WTI fell more than 6%.
Prior to bank earnings, equity traders will be looking to tomorrow’s US CPI print with caution. Inflation and inflation expectations have been the major driver of sentiment and price action of late. CPI is forecasted to come in at 8.8% YoY, while Core CPI is expected at 5.7%. A hot print has the potential to put more pressure on risk, as traders will increase bets on hawkish Fed policy. Wednesday also sees a Bank of Canada interest rate decision, while the rest of the week is packed with PPI and consumer sentiment releases.
Upcoming Economic Calendar (High Impact Events)
Courtesy of the DailyFX Economic Calendar[3]
Despite the slow march higher in Tuesday’s session, S&P 500 futures (ES) could not reclaim the 3900 threshold. That area has been a decent fade zone for bears to enter fresh shorts, with each advance being rejected promptly. Price action may quiet down ahead of the major inflation data tomorrow, so we may fail to
