US Stocks Face Inflation Data Test Amid Record Highs

The US stock market has reached record highs thanks to a technology-led rally, but this trend is set to be tested by fresh inflation data due next week. The S&P 500 index gained 5.75% over four sessions ending on Tuesday, its biggest four-day surge since April 2025. This upturn has pushed the S&P 500's year-to-date gain to more than 12% as of Thursday.

Economists expect the July Consumer Price Index (CPI) report to show a 3.4% year-over-year increase, with core CPI rising 2.5%. A higher-than-expected CPI reading could lead to increased pressure on the Federal Reserve to raise interest rates, which would be a negative for stocks.

The market has inflation anxiety, said Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments. We will see next week if the inflation data gives the market a sigh of relief.