the CPI January The report was hot, much hotter than expected, and the risk of fomc narrowing. Not only the country’s highest level near the current levels, but the opportunity to decrease even to reduce one basis rate of 25 in 2025 and the increasing possibility of the table will return. This increases the chances of stagnation caused by the federal reserve, but the opportunities for investors still exist. Inflation is a hot problem, but so far, it has not yet affected the economic activity or the upward trend in the stocks.
Economic activity is still strong, as the GDP Q1 is expected to work near 3.0 % in the first quarter. What this means for investors is the continued growth of the stock market and a high possibility that the bullish trend is in the S&P 500 NYSEARCA: Spy It will continue. The market declined after the release of the consumer price index and this step may deepen before the reversal start, but the bounce is the most likely result; Cpi-caused by the opportunity to buy.
Supports labor market health, profit growth, and S&P 500 UPTREND
The strength of the labor market is one of the reasons why the CPI report is less than a sale event than some believe. Work data in January included large annual reviews, but they are in line with directions. Trends include creating fixed job opportunities, accelerated labor growth at the end of the year, low unemployment, and high wages. Wages grew at a 4 %+ pace, which is a decisive factor for inflation and consumer expectations, which supports inflation while maintaining consumer health. According to the consumer price index, inflation increased by 3.0 % and 3.3 % at the main and basic levels, leaving the “medium consumer” stronger than last year despite the high prices.
The growth of the S&P 500 is workers in the cause of the high index. The decrease in low opportunities for low effect rates, but is expected to grow, however. As, consensus numbers assume steady growth in Q12025 for 2024 and serial acceleration throughout the year. The difference is that all sectors will produce growth, compared to only nine in 2024, with six growing by more than 10 % and leaders including technology, health and industrial care. In 2026, these trends are expected to continue and another year of profit growth is produced in the middle of adolescence.
The profits are important on their own, but more than that due to the effect on capital returns. S&P 500 companies will increase stock profits and purchases on average through high -number amounts and low number in 2025 and maintain the direction in 2026. This means that the number of decreasing shares is exacerbated by business growth, profit distribution, and public budget improvements, which It is a strong Wind Tailwind for the value of shareholders.
The danger is inflation. It is accelerating
The danger is inflation. January data shows an acceleration in violation of the expected contraction. Inflation can continue to accelerate this scenario because the federal reserve policy may be very lenient, and Trump’s policies are expected to be inflationary. On the one hand, the customs tariff may affect the prices, while the opposite winds are expected to pay the expansion and labor investment.
The market reaction to the news was as expected, with a decrease in the S&P 500 immediately after the release. However, traders seized early morning as an opportunity, and showed their support in EMA for 30 days. If this level continues to support, the market may recover quickly and move to set new levels. If not, the S&P 500 can move to the level of 5,960 to 5,790, where the support is more stable. In this scenario, the market can remain linked until later in the year.
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