Why This Friday Could Be a Big Day for the Stock Market

Core Economic Indicators - The Consumer Price Index (CPI) data, a major gauge of inflation in the U.S. economy, will be published on February 13 at 8:30 a.m., which could significantly impact asset prices [1] - Core CPI, which excludes food and energy prices, rose 2.6% year over year in December, marking a four-year low, with expectations for January to show a further decline to 2.45% [3] Market Reactions and Predictions - A positive CPI report indicating lower inflation could lead to a significant rise in the stock market, driven by investor hopes for additional Federal Reserve interest rate cuts [3][4] - The futures market currently anticipates two additional quarter percentage point cuts to the Fed's target interest rate in 2026, which could be influenced by the upcoming CPI data [4] Consumer Spending Trends - Consumer spending has slowed, with the top 10% of income earners accounting for nearly half of all consumer spending in the U.S., raising concerns about sustainability until inflation cools [6] - The issue of "affordability" has become prominent, affecting middle-class Americans' spending habits [6] Tariff Impacts on Inflation - Investor concerns regarding the Trump administration's tariffs on imports and their potential inflationary effects have diminished, as recent data has not shown significant tariff-driven inflation [9] - The upcoming CPI report could provide further evidence that tariffs are not as damaging to inflation as previously feared, especially if it shows continued moderation [9]