From Nasdaq: 2025-02-12 10:30:00

The January CPI report revealed higher-than-expected inflation, raising concerns about FOMC tightening. This reduces the likelihood of rate cuts and increases the odds of a Fed-induced recession. Despite this, economic activity remains strong, with Q1 GDP forecasted at 3.0%, supporting stock market growth and the S&P 500 uptrend.

Labor market health, strong earnings growth, and capital returns are key factors supporting the S&P 500 uptrend. Wages are growing at a 4%+ pace, sustaining consumer health amid inflation. Earnings growth is expected in all sectors, with mid-teens growth projected for 2026. This, coupled with increased dividends and buybacks, is beneficial for shareholder value.

The risk lies in accelerating inflation, contrary to expectations of contraction. Market reactions to the CPI report were initially negative, but traders viewed the dip as a buying opportunity. Depending on support levels, the market could rebound to set new highs or remain range-bound. Tariffs and easing business headwinds are factors affecting future inflation and market movements.



Read more at Nasdaq:: Inflation Persists, But So Do Stock Opportunities: Rally On