Inflation Report's Tremors on Wall Street: Market Braces for Impact

The U.S. stock market faces turbulence as a crucial inflation report approaches, heightening investor concerns amid economic slowdown fears amplified by President Trump's tariffs. Recent data indicate a possible CPI rise, potentially restraining the Fed's rate cut plans and fueling fears of stagflation.

This week, all eyes are on Wall Street as investors brace for a pivotal inflation report expected on Wednesday. The U.S. stock market, already contending with volatility, could resonate with further tremors if the report suggests continued inflationary pressures, impeding anticipated Federal Reserve rate cuts.

Recent economic data has portrayed a mixed picture with potential implications for monetary policy. The S&P 500 noted its worst performance in six months, exacerbated by President Trump's tariff strategies and surprising German fiscal moves. Despite this backdrop, investors find some solace in potential interest rate reductions by the Fed.

The critical Consumer Price Index (CPI) report could act as a catalyst. "A hot CPI print will likely scare the market," said Bryant VanCronkhite of Allspring Global Investments. Market analysts warn of the 'S-word': stagflation, a dual threat of rising inflation coupled with slowing economic growth, further complicating the economic outlook.

(With inputs from agencies.)