Markets pause ahead of key inflation data after a softer jobs report temporarily eased rate hike fears.
The S&P 500 halted its rally this week as investors await tomorrow’s US CPI report, a critical input for the Federal Reserve’s September decision. The index has traded in a tight range since Wednesday, when a delayed US-Iran deal and mixed labor data dampened momentum.
Earlier, a weaker-than-expected nonfarm payrolls report briefly lowered the odds of a September rate hike to 38%, down from 54%. However, expectations rebounded to 48% after a deeper look revealed a drop in government jobs, while the unemployment rate fell to 4.1%, signaling underlying labor market strength.
Traders now focus on the CPI release, which could sway Fed policy and Chair Warsh’s Jackson Hole remarks. A higher-than-expected print may spark a selloff, while softer data could fuel further gains in equities.