Hotter CPI Unlikely to Deter Rate Cuts, S&P 500 Rally — For Now

Core Insights - Equities traders are expected to overlook signs of persistent inflation in the upcoming consumer price index (CPI) report, as optimism surrounding a potential Federal Reserve interest-rate cut dominates market sentiment [1][2] - JPMorgan Chase & Co. predicts a 65% chance that the S&P 500 Index will rise following the CPI release, despite expectations of elevated inflation figures [2][3] - Economists forecast a 0.3% increase in the September core CPI, leading to a 3.1% annual rise, which remains above the Federal Reserve's target [4] Market Reactions - The CPI report is crucial for investors as it will provide insights into the economy ahead of the Federal Reserve's interest-rate meeting, influencing market trends for the rest of the year [5] - A CPI print that meets or is lower than expectations could boost the S&P 500 by up to 1.5%, while a higher-than-expected core inflation reading could lead to a decline of approximately 2.3% [7] - The recent government shutdown has limited economic data availability, making the CPI report particularly significant for market participants [6][8]