Market Rallies Into CPI Announcement


Joseph Rangel

Feb 13th 2023  .  3 min read

Market Rallies Into CPI Announcement

The stock market is making gains today! The S&P 500 futures started the day on an upward trend, after hitting the key 4,100 level over the weekend. Last week was a big turning point for the market, and the future was uncertain. However, as the trading session began, the 4,100 level held strong, showing that buyers are confident and in control. 

The opening bell marked the beginning of an eventful trading session in the stock market. The 4,100 level and the Volume Weighted Average Price (VWAP) were subjected to a final examination. However, the buying volume promptly returned to support the market, leading to a simultaneous rise in the Nasdaq and Dow Jones indices. These developments are indicative of a positive outlook for the stock market.

Nasdaq Leads Higher Despite Some Weakness

Today, some technology sector stocks faced challenges despite the pre-report rally ahead of tomorrow’s release of the U.S. Consumer Price Index (CPI). Tesla Motor Company (TSLA) ended the day in negative territory, while Google (GOOGL) barely managed to close positively with a 0.04% increase. The performance of these stocks over the next few sessions will determine whether they will continue to lag behind or make up ground. Meanwhile, stocks such as Netflix, Inc. (NFLX) and Apple, Inc. (AAPL) sustained their upward trajectory.

As the trading session progressed, the stock market trended upward across the various indices. Traders are eagerly awaiting the upcoming Consumer Price Index (CPI) report, which has the potential to significantly impact the market. The S&P 500 futures closed at a high point of 4,150, a minor psychological level. It is unusual for the market to experience such movement prior to a potentially market-altering event. It is unclear whether this signals a lack of concern about the report’s outcome or if a trap is being set. Only time will reveal the truth.

Big Looming Catalyst Ahead

The upcoming Consumer Price Index (CPI) report is highly anticipated, with expectations for the year-over-year figure set at 6.2%, a 0.3% decrease from the previous report. The previous CPI data was in line with predictions and had a lackluster impact on the market. If the current report shows a figure below 6.2%, it could trigger a significant rise in the market, with the possibility of reaching 4,300 in the near future. Conversely, if the data exceeds expectations and is above 6.2%, a retest of 4,000 may occur.

In the event that the report produces inconclusive results, a sideways reaction in the market is also a possibility.

Couple Key Names Still to Report

Another thing to be aware of this week is some names that still need to report their earnings. Two of the most significant companies to do so this week are Roku (ROKU) and Shopify (SHOP). Roku will impact streaming and ad companies, and Shop will affect fellow e-commerce businesses. Forward guidance from each will also tell their view on the space moving forward

Options Expire on Friday

Lastly, it is Options Expiration (OpEX) week in the market. Market makers have one underlying goal during OpEx week: to have as many option contracts expire worthless as possible come Friday. For now, CPI will overshadow any manipulation in the market, but it will take its toll toward the end of the week. 

Market Grinds Higher Into CPI

The Nasdaq and the S&P 500 were positive to close the session. The S&P 500 futures closed up 1.20%, adding 49 points, while the Nasdaq futures closed up 1.61%, gaining 199 points. The Dow Jones futures followed, closing up 1.12% and adding 380 points.