Stock Market Faces Inflation Test as US Stocks Reach Record Peaks

The US stock market has reached record peaks, driven by a sharp technology-led rally that lifted the S&P 500 index. The benchmark index gained 5.75% over a four-session stretch ending on Tuesday, its biggest four-day surge since April 2025.

Next week's inflation data will test this record-setting performance, which has pushed the S&P 500's year-to-date gain to more than 12%. The Federal Reserve is also watching inflation closely, with three policymakers dissenting in favor of a rate hike at its last meeting.

Economists expect the Consumer Price Index (CPI) to rise 3.4% on a year-over-year basis, while core CPI is projected to increase by 2.5%. A higher-than-expected inflation reading could lead to a rate hike and weigh on stocks.