How Markets React When Inflation Data and Fed Decision Are Released on the Same Day

Today, markets are bracing for a rare event: the simultaneous release of U.S. inflation data
and the conclusion of the Federal Reserve meeting with the interest rate decision announcement.
Investors are closely watching this because usually,
the days when either inflation data or the Fed decision is released separately are characterized by volatility.
It’s uncommon for these two events to occur on the same day.

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What to Expect Today
What About Inflation

Details

According to “Dow Jones Market Data,” the Consumer Price Index (CPI) release and the Federal Reserve’s policy decision have coincided on the same day only 13 times since 2008. Typically, all three major U.S. stock indices tend to rise on these few occasions. The S&P 500 averages a 0.7% increase, the Dow Jones Industrial Average climbs by about 0.9%, and the Nasdaq Composite rises by more than 1%.

What to Expect Today

It is widely anticipated that the Federal Reserve will keep interest rates unchanged within the current range of 5.25% to 5.5%. However, investors will be looking for any clues about the future path of monetary policy. Strategists do not expect more volatility than usual on Wall Street today, though fluctuations could increase on Wednesday if Fed Chairman Jerome Powell says anything unexpected during the post-announcement press conference. However, “Siqueira” noted that the likelihood of this happening is very low, as Powell is typically very cautious in his remarks.

What About Inflation

According to a survey conducted by “The Wall Street Journal,” the Consumer Price Index (CPI) is expected to rise by a marginal 0.1% in May on a monthly basis, marking the slowest pace of increase in seven months. This would be the second consecutive month of slowing inflation, with an annual rate possibly stabilizing at 3.4%. The core CPI, which excludes volatile food and energy prices, is anticipated to increase by 0.3% in May on a monthly basis. “Siqueira” mentioned that if the inflation reading meets or beats expectations, it could provide some positive sentiment in the market. However, given the current high valuations, there might not be much short-term upside left for U.S. stocks. Conversely, if inflation indicators are significantly higher than expected, it could lead to minor sell-offs in the stock market.

How Markets React When Inflation Data and Fed Decision Are Released on the Same Day

How Markets React When Inflation Data and Fed Decision Are Released on the Same Day

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