Positive sentiment ahead of CPI data

Wall Street rallied on Wednesday

Yesterday has been again a very positive day for the US stock market.

All three major indexes have closed in profit.

The S&P 500 closed at +1.28%, the Nasdaq ended the trading session at +1.76% and the Dow Jones closed at +0.80%.

The positive movement of the stock market has been driven by investors' expectations regarding inflation in the US which is believed to cool down.

Unmissable events today

Today, Thursday 12 January 2023, the Labor Department releases its consumer-price index for the month of December at 13:30 pm GMT.

The CPI is one of the most important reports to understand if the monetary policy of the Federal Reserve to lower inflation is working fine.

For the month of November, the inflation was at 7.1% and for the last month of the year 2022 is forecasted to cool down to 6.5%.

If the CPI report today will show a soft or a negative monthly change in inflation, we could expect a big positive reaction in stocks.

Today, at the same time, will also be released the initial jobless claim data which is expected to be higher than the previous month.

Markets are going to be very volatile today due to the release of the above-mentioned data.

Sentiment Indicator - Fear & Greed Index

The market sentiment is at 55 in the "Neutral" mode.

The investor sentiment is getting more positive every day and is going towards "Greed" mode.

FedWatch Tool - FED rates probabilities

79.2% of investors are expecting the FED to increase the interest rates by 0.25% at the next meeting.

The remaining 20.8% are expecting a 0.50% rate increase.

The number of investors expecting a rate increase of 0.25% is increasing on daily basis.

No other options are considered at this time.

The next FED meeting is on 1 February 2023.

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