Good Morning Traders!
Today’s economic calendar brings the shortened week to a close with the highly anticipated August CPI report. Markets received headline CPI, Core CPI, and the underlying index readings, giving traders the most important new look at consumer inflation this week. Following yesterday’s PPI report, today’s data will help determine whether producer and consumer inflation are telling a consistent story or whether inflation pressures are diverging at different stages of the economy. Core CPI should receive particular attention because it strips out the more volatile food and energy components and can provide a clearer read on underlying price pressures.
The market will ultimately be trying to determine what CPI means for Treasury yields and the future path of Federal Reserve policy. Cooler inflation could pressure yields lower and provide support for rate-sensitive equities, particularly technology. Hotter inflation could push yields higher as traders reassess the policy outlook. An in-line headline with conflicting underlying components could produce more complicated price action, making it important to look beyond the initial number and watch how bonds, the dollar, and equities behave once the details have been processed.
There is also an important second data reading with Preliminary University of Michigan Sentiment, Current Conditions, Expectations, and both one-year and five-to-ten-year inflation expectations. Those inflation expectations could either reinforce or challenge the narrative established by CPI less than two hours earlier. Household Net Worth, USDA Crop Production and WASDE follow at noon, with the August Federal Budget Balance at 2:00PM ET.
With CPI before the open and Michigan inflation expectations shortly after the cash session begins, traders should be prepared for two separate periods of potential volatility. The first algorithmic move following CPI may not become the day’s trend, particularly if the underlying inflation components tell a different story from the headline or Michigan expectations subsequently alter the rates reaction. Watch Treasury yields, technology breadth, and market acceptance after both data windows for confirmation.
Now, we will discuss SPY, QQQ, AAPL, MSFT, NVDA, GOOGL, META, and TSLA.
SPDR S&P 500 ETF Trust (SPY)
SPY is currently trading around 762.00 as markets close out the shortened week with the highly anticipated August CPI report. After yesterday’s PPI, today’s consumer inflation data represents the more important test for the market’s inflation and Federal Reserve outlook. If buyers defend 762.00 following the 8:30AM ET reaction, a move toward 768.00 may develop, followed by 774.00 if momentum builds. Sustained strength above 780.00 would improve the short term structure and put buyers back in control.
If SPY loses 762.00 with conviction, sellers may press into 756.00. A breakdown there could expose 750.00, while continued weakness may bring the 744.00 region into focus. With Michigan sentiment and inflation expectations arriving at 10:00AM ET, traders should be prepared for a second potential volatility window after the initial CPI reaction.
Treasury yields should remain one of the clearest confirmation signals. A large equity move accompanied by a sustained move in yields will carry more weight than an initial headline reaction that reverses once traders digest the core inflation details.
Apple Inc. (AAPL)
AAPL is currently trading around 326.25 and continues to demonstrate strong relative performance compared with several other mega cap technology names. If buyers defend this pivot, price may rotate toward 331.50, followed by 336.75 if momentum builds. Sustained strength above 342.00 would reinforce the bullish short term structure.
If 326.25 breaks lower, sellers may test 321.25 quickly. Continued downside pressure could extend into 316.25, while deeper weakness may bring the 311.25 region into focus. Continued outperformance during a high volatility CPI session would provide another constructive indication of institutional demand.
Microsoft Corp. (MSFT)
MSFT is currently trading around 494.50 and remains directly beneath the psychologically important 500 level. If buyers reclaim and establish acceptance above that area, price may advance toward 501.50, followed by 508.50 if momentum builds. Sustained strength above 515.50 would materially improve the short term structure.
If 494.50 fails to hold, sellers may press into 487.50. A deeper pullback could test 480.50, while continued weakness may bring the 473.50 region into play. Today’s CPI reaction could determine whether 500 transitions back into support or continues acting as overhead resistance.
NVIDIA Corporation (NVDA)
NVDA is currently trading around 219.75 and remains an important leadership gauge for semiconductors and QQQ. If buyers defend this pivot, a move toward 227.00 may develop, followed by 234.25 if momentum strengthens. Sustained trade above 241.50 would indicate renewed upside expansion and improving semiconductor leadership.
If 219.75 fails to hold, sellers may test 213.75 quickly. Continued downside could extend into 207.75, while deeper weakness may bring the 201.75 region into focus. Given NVDA’s sensitivity to rates and risk appetite, its response should provide an important confirmation signal for the broader technology reaction to CPI.
Alphabet Inc Class A (GOOGL)
GOOGL is currently trading around 334.25 and continues to lag several of its mega cap peers. If buyers defend this level, price may rotate toward 340.75, followed by 347.25 if momentum improves. Sustained strength above 353.75 would indicate a more meaningful recovery attempt.
If 334.25 fails to hold, sellers may guide price toward 328.25. A breakdown there could expose 322.25, while continued weakness may bring the 316.25 region into play. Relative performance remains especially important if QQQ responds positively to today’s inflation data.
Meta Platforms Inc (META)
META is currently trading around 650.50 and continues to demonstrate strong relative performance after its recovery above the 600 area. If buyers defend this pivot, a push toward 658.50 may develop, followed by 666.50 if momentum builds. Sustained strength above 674.50 would reinforce the bullish structure and continued institutional demand.
If 650.50 breaks lower, sellers may guide price toward 643.00. A deeper pullback could test 635.50, while continued weakness may bring the 628.00 region into focus. META’s ability to maintain relative strength through today’s macro volatility should remain worth monitoring.
Tesla Inc. (TSLA)
TSLA is currently trading around 362.75 and continues to maintain an improved short term structure following its recent recovery. If buyers defend this pivot, a move toward 371.25 may develop, followed by 379.75 if momentum continues. Sustained strength above 388.25 would reinforce bullish momentum and indicate continued speculative demand.
If 362.75 fails to hold, sellers may test 354.75 quickly. Continued downside pressure could extend into 346.75, while deeper weakness may bring the 338.75 region into play. TSLA can amplify broader risk-on and risk-off moves, making today’s CPI driven market reaction particularly relevant.
Final Word: Good luck, trade safely, and have a great weekend!
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
