Slightly Positive Stock Market Is Waiting on CPI Report Today

The US stock market indices are all up today, but only marginally as they await more inflation news from the US CPI report.

The Nasdaq Composite closed on Tuesday with a 0.75% increase. The Dow Jones likewise closed up, by 0.32%, with the S&P 500 up as well with a gain of 0.48%.

Those numbers may not stay positive for long. We saw a dip in market trading after the US PPI numbers came out, which showed that inflation was running hotter than anticipated for last month. The US CPI report may show something similar.

The expectation right now is that today’s Consumer Price Index report will reveal an inflation increase as the CPI gains 3.4%. That would set back the Federal Reserve’s plans to issue interest rate cuts, since they are looking for strong progress toward a 2% inflation rate before they make those cuts.

US inflation has been steadily increasing all year, with each new monthly economic report pointing toward higher and higher rates. That has made it difficult for stock market trading to take off like it should have with so many strong earnings reports coming in. Many retailers have posted revenue gains over the previous year, but high inflation has created a timid market.

What to Expect with the CPI Report

Most analysts anticipate that CPI will come in high again for April, indicating increasing inflation. That will impact the stock market with muted trading and investors selling off shares as they become tired of waiting for inflation to drop and stock shares to improve.

Most trading should happen among the stronger stocks that have shown resilience from one quarter to the next, as investors seek safe bets among proven stocks.

Two stocks that had plenty of traction earlier this week- AMC (AMC) and GameStop (GME)- have slowed down considerably. Higher inflation indicated by the CPI report will likely slow them down even more as these already risky stocks become even more treacherous for investors.