The report of Wednesday’s inflation can take more importance in the stock market recently given wild moves. S&P 500 increased its recent loss on Tuesday after an afternoon rally failed on Tuesday, as there was a possibility of an economic recession. President Donald Trump announced additional tariffs on Canadian steel and aluminum imports. Ontario Premier Dug Ford in response threatened the US to shut down electricity. The US agreed to resume military aid shipments in Ukraine after supporting the 30 -day ceasefire. All this comes as investors for the latest consumer price index release, on ET at 8:30 am on Wednesday. Economists voted by Dow Jones have expected an increase of 0.3% month and month and up to 2.9% from the year-year period. The core CPI, which removes unstable food and energy prices, estimates that 0.3% month a month and 3.2% year on the year. Against that background, JP Morgan Trading Desk explained how it expects the market to react to CPI based on five different scenarios: 5% chance – Core CPI increases 0.33% or more: S&P500 will fall from 1.5% to 2.5% under this result, according to traders. He said, “The first tail risk, which can accelerate inflation after 0.45%of the previous month. Even the best case in this scenario is still a print that will be the second strongest since March 2024,” he said. 25% chance-core CPI grows between 0.28% and 0.32%: The trading desk stated that this print would add to the “stagflation tale” despite marking the fall in core prices of the month. S&P 500 will fall from 1% to 1.5% under this scenario. 40% probability – Core CPI increased between 0.24% and 0.28%: JP Morgan traders called this possible result “reception relief” from high inflation. Nevertheless, the potential market response ranges from 0.5% decline to 1% advance. According to JPMorgan traders, 25% probability – Core inflation benefits between 0.2% and 0.24%: This potential benign print will be 0.5% to 1.5% advance for S&P 500. 5% chance – the core CPI increases 0.19% or less: it is “the risk of the second tail, which comes from a material surprising a material from the shelter prices and core accessories,” said JP Morgan traders. The S&P 500 will pop pop 1.25% to 2% under this scenario.
