Stocks could continue to move higher next week, as investors await a key report on Tuesday on consumer inflation. The Consumer Price Index for August is one of several reports on a busy economic calendar next week, but it is the final data point market strategists expect that could help determine the extent of the upside. Federal Reserve rates on Sept. 21. Evercore ISI’s Julian Emanuel said the market is bracing for a 75 basis point (or three-quarters) increase in the fund’s target rate on offer from Federal Reserve, this will be the third time in a row of that size. “Even if inflation data surprises with price gains, as long as it’s not a material surprise,” said Emanuel, head of equities, derivatives and quantitative research at Evercore. quality, the market is likely to mitigate that.” “If the inflation data does surprise the price drop, which we think might happen, then any thought that 75 is not a fully signed, sealed and delivered deal would be extreme. optimism for stocks.” Shares rose on Friday and higher for the week, breaking a three-week losing streak. The S&P 500 Index is on track for a 3.7% weekly gain as of Friday afternoon. The index broke below 3,900 on Tuesday, but reversed and rebounded above that key level. “We think this week’s price action, combined with the bearish sentiment and the prospect of a potentially unpromising Fed pause in 2023 has sent equities to the floor here,” Emanuel said. The S&P Index was trading above 4,060 on Friday afternoon. Emanuel’s view contrasts with some strategists, who believe the market could return to the lows or even drop below the lows before the sell-off ends. For example, Guggenheim’s Scott Minerd told CNBC on Thursday that the bear market is still intact and the S&P 500 could drop 20% from here in mid-October. Minerd, Guggenheim’s global chief investment officer, said: knows this could be a buying opportunity if and when the S&P falls to the 3,000 to 3,400 range. Minerd thinks the Fed may be leaning too far in a hawkish direction. “I think there is a mindset or a fear at the Fed that if they suddenly end or pause they run the risk of losing their credibility,” he said. Fed officials have discouraged investors with the view that they will reverse the trend of rate hikes and begin cutting rates in the second half of next year. Instead, they promoted the idea that rates would stay higher in the long run to combat inflation. Inflation print remains hot In addition to Tuesday morning’s CPI, there is the inflation producer price index reading Wednesday. Retail sales and industrial production are released on Thursday. But CPI could be the key to the trading week. Rob Dent, senior US economist at Nomura, predicts core CPI will grow 0.4 per cent in August, or at a 6.1 per cent annualized rate, above July’s 5.9 per cent rise. On inflation, he added, the drop in gasoline prices is expected to drag that annual pace to 8% from 8.5% in July. “We think the big focus should be on monthly core inflation,” he said. “It feels like we’re in a tug of war.” He said while prices related to the supply chain, such as used vehicles and clothing, will drop, inflation will continue to drag higher due to the rise of money-related components. rent. Dent said the CPI report can be confusing, especially since many focus on headline, not core, food and energy data. “I think the broad message is that inflation is still very, very high. The problem is it’s moving into the services sector, which is being driven more by wage growth,” Dent said. “In terms of our concerns about inflation, I don’t think the August CPI report will make us or the Fed feel much better.” Dent expects the Fed to be ready to raise interest rates by 75 basis points in September. “It looks like the August CPI will have more of an impact on the November FOMC meeting than September.” “It’s coming out during a blackout. They’ve seen enough to tell them that another 75 people could be covered… Everything we’re seeing in terms of wages, service inflation is telling you the situation. The inflation pattern is still pretty severe… It just feels like the threshold for a 75 basis point increase based on August CPI is very high.You’ll have to see a drop in core inflation .” Fed officials have been hawkish this past week. Fed Chairman Jerome Powell on Thursday reinforced the Fed will keep interest rates high to fight inflation. Cleveland Fed President Loretta Mester on Wednesday said inflation remains very high and lending rates could be “slightly higher” 4% early next year. Fed officials won’t speak for the next week because they will be in for a blackout ahead of their next two-day meeting, which begins September 20. Currently, the futures market is pricing in an end, or final rate. just under 4% in the first quarter of next year. “Our expectation is that by the end of the year, we’ll be at 3.75% to 4%,” Dent said. He expects the Fed to hit a closing rate of 4.125 percent in February. Interest rates and the dollar rose but fell over the weekend. That helped ease some of the pressure on the stock. If the Fed is expected to raise CPI, the pressure may return. Technically speaking, Oppenheimer technical analyst Ari Wald said rising Treasury yields represent a major potential risk for equities, as the market experiences a typical tough month in September. early October. The 10-year yield, price volatility, was close to 3.32% on Friday, still below the June high of 3.49%. “Long-term bond yields remain our top concern,” Wald said. “That was clearly what led to the weakness in the first half and we think rates may need to go up if the stock market bottoms out.” But the stock market has also made positive strides in the past week. “We think, the market is in the process of making a bottom. You need to be aware of the seasonality. That will last for a few weeks,” the technician said. September was the worst month for stock market performance, with the S&P 500 index falling an average of 0.6% since World War II, according to the CFRA. One positive over the past week is that the S&P 500 has rebounded above its 50-day moving average. That level was 4,030 on Friday. The 50-day is simply the average of the past 50-day closings, and a move above the level held is considered a sign of positive momentum. Wald said the next challenge for the S&P 500 is to break back above its 200-day moving average, currently at 4,275. “The 200-day average will be a key level on the upside that was rejected in mid-August,” he said. “That’s often seen as the line between a bull market and a bear market.” Wald said he expects the S&P index to eventually rise above it and then recover in the fourth quarter. “Our expectation is that the S&P can hit 4,600,” he said. Schedule Monday Earnings: Oracle, Runway Lease Tuesday 6:00am NFIB Small Business Survey 8:30am CPI 2:00pm Federal Budget Wednesday 8:30am PPI Thursday Earnings : Adobe 8:30 a.m. Initial Release 8:30 a.m. Retail 8:30 a.m. Import Price 8:30 a.m. Empire State Manufacturing 8:30 a.m. Philadelphia Fed Manufacturing 9:15 a.m. Industrial Production 10: 00 a.m. Business Inventory Friday 8:30 a.m. Business Leaders Survey 10:00 a.m. Consumer Opinion 4:00 p.m. TIC data