JPMorgan Warns S&P 500 Could Swing Up to 2% on July CPI Report

Wall Street is bracing for the July Consumer Price Index (CPI) report, which could jolt the S&P 500 by up to 2% in either direction. The data lands just weeks before the Federal Reserve's September policy meeting, where Chair Kevin Warsh has emphasized the central bank's commitment to its 2% inflation target.

Economists surveyed by Dow Jones expect headline CPI to rise 0.1% in July, nudging the 12-month increase to 3.4%. JPMorgan's trading desk has mapped out five distinct scenarios based on where the core month-over-month print lands, with probabilities and projected S&P 500 moves underscoring just how binary the reaction could be.

The most likely outcome, assigned a 40% probability, would see core CPI land between 0.2% and 0.25%, a reading that could lift the S&P 500 by 0.25% to 0.75%. However, tail risks are stark: a hot print above 0.3% carries a 5% probability yet could slam stocks down by 1.5% to 2.5%, while an equally unlikely sub-0.15% figure could trigger a rally of 1% to 2%.