Zhitong Finance APP learned that in October, the S&P 500 index rose 6.4%, which is expected to hit the second highest monthly increase in in a year. Where will U.S. stocks go after the rebound lies in the inflation data on Friday. This data may put investors in greater volatility. The key question that the market hopes to get answers is: Is the high inflation over the past decades approaching its peak? Or will prices continue to rise and further drag down U.S. stocks? Traders are paying close attention to the Fed’s preferred inflation indicator PCE, which will help determine whether the Fed will continue to raise interest rates at next week’s meeting 2 275 basis points. If the indicator rises further, it may extend large-scale interest rate hikes beyond this year. "Inflation is a big uncertainty factor in the stock market. If investors are forced to adjust their position again, inflation above expectations will put more pressure on the stock market." According to economists surveyed by Bloomberg, the U.S. PCE index in September will increase by 6.3% from the same period last year. Excluding food and energy, this indicator is expected to increase 20.5% month-on-month, while also rising 5.2% from September 2021. Government data earlier this month showed that core CPI accelerated to 6.6% in September, the highest level in 40 years. .
When the Consumer Inflation Report was released, U.S. stocks performed more turbulent this year, with the S&P 500 falling 7 out of 10 times. However, the S&P 500 index set its best trading performance in 13 years on October 13.
Investors will also keep a close eye on the U.S. Employment Cost Index, an indicator of wages and benefits paid by employers. As costs continue to climb, the indicator is expected to grow by 1.2% in the third quarter, staying near record levels. Powell listed it as a key reason for turning to a more radical inflation stance last December, and investors have been paying close attention to the indicator throughout the year.
After the U.S. inflation expectations rose for the first time in seven months in early October, the market will also obtain the latest information on the consumer confidence index from University of Michigan .
Martin said: "If inflation data cools down, the Fed will lay the foundation for stopping large rate hikes. But if not, it will be ready to continue to raise interest rates after November. Currently, investors are afraid to enter the market and exit the market by the end of the year."
