With investors on the defensive, a softer-than-expected US Consumer Price Index (CPI) report for November, released on Tuesday (13), would be a risk, JPMorgan’s sales and trading department boldly predicted.S&P 500 indexThe highest probability of a strong rebound is 10%.
JPMorgan’s team, including Andrew Tyler, conducts scenario analysis for their clients and believes that if the US CPI annual growth rate in November is below 6.9%, it is expected to increaseS&P 500 indexAn 8% to 10% gain would extend the index rally from its October lows to over 20%, ending a 12-month technical bear market.
While the probability of this happening is very low, only around 5%, the above analysis still reflects the widely held view that the November CPI plays a key role in determining short-term market trend.
The US Labor Department will announce its latest CPI ahead of the US stock market on Tuesday (13th), which is the day before the Federal Reserve (Fed) announces its latest interest rate decision this year. Economists expect the CPI to rise 7.3% year over year in November, down from 7.7% in October.
JPMorgan’s analyst team said the most likely scenario is that November’s annual CPI growth rate will be between 7.2% and 7.4%, which will make theS&P 500 indexFrom 2% to 3%. CPI close to or higher than the previous value (7.7%) will bring trouble, Xiaomo expects that once the CPI annual growth rate exceeds 7.8%,S&P 500 indexMaybe down 5%.
Tyler said, “The CPI data will determine market movement and whether it’s going up or down before earnings season kicks off in mid-January. Equity positions aren’t that scarce, but they’re still at record lows. Investors They seem to believe that this report is in line with expectations or is a little accommodating.”
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