Goldman Sachs and JP Morgan jointly warn: If the U.S. December CPI is below expectations, U.S. stocks will experience volatility
Goldman Sachs and JPMorgan Chase warned that if the U.S. December CPI data falls short of expectations, U.S. stocks may face volatility. The market expects the year-on-year CPI growth rate to rise from 2.7% to 2.9%. Goldman Sachs predicts that if the core CPI month-on-month growth rate exceeds 0.4%, the S&P 500 index will drop by 2%; JPMorgan Chase expects that if the month-on-month growth rate exceeds 0.3%, the index will decline by 1%-2%. Both institutions believe that weak CPI data could trigger a rebound of 1%-2%
According to the Zhitong Finance APP, Wall Street giants Goldman Sachs and JPMorgan Chase expect that if the U.S. December CPI data released on Wednesday is disappointing, U.S. stocks will face another volatile day.
The market currently anticipates that the year-on-year growth rate of the U.S. December CPI will rise from the previous value of 2.7% to 2.9%, while the month-on-month growth rate will remain at 0.3%; the core CPI inflation, excluding volatile factors such as energy and food, is expected to maintain a year-on-year growth rate of 3.3%, with the month-on-month growth rate slowing to 0.2%.
Goldman Sachs predicts that if the month-on-month growth rate of the U.S. December core CPI exceeds 0.4%, the S&P 500 index will drop by 2%. JPMorgan Chase expects that if the month-on-month growth rate of the U.S. December core CPI exceeds 0.3%, the S&P 500 index will fall by 1%-2%.
At the same time, both Goldman Sachs and JPMorgan Chase expect that if the month-on-month growth rate of the U.S. December core CPI is relatively weak, it could trigger a 1%-2% rebound in the S&P 500 index.
A series of robust economic data previously led to a cooling of market expectations for a Federal Reserve interest rate cut, with the S&P 500 index down 0.7% so far this year, while also causing an increase in U.S. Treasury yields and heightened volatility in U.S. stocks.
Goldman Sachs strategist Dom Wilson stated, “U.S. stocks may now need a clear easing of the Federal Reserve's hawkish stance to sustain an upward trend.” “We believe the stock market may be more vulnerable until we reverse our bearish view on the Federal Reserve's put options.”
The JPMorgan Chase market intelligence team pointed out that Wednesday's inflation data is a “key data point,” and the volatility index VIX based on S&P 500 options is at its highest level since the CPI was released last October. The team stated, “Moderate inflation data could reignite a stock market rebound, while strong earnings seasons could boost the rebound.” However, the team added, “Strong inflation data could push the 10-year U.S. Treasury yield to 5%, increasing volatility across all asset classes and continuing to pressure the stock market.”
