U.S. inflation data today: is there upside left in the S&P 500?

S&P 500 is trading up this morning after the U.S. Bureau of Labour Statistics confirmed that inflation continued to cool off last month.

Market technician reacts to the CPI print

On a year-over-year basis, consumer prices were up 5.0% in March versus 5.1% that economists had forecast. Reacting to the data, Craig Johnson – Chief Market Technician at Piper Sandler said today:

At this point in time, we’re in the hop phase. We continue to think that the market could trade up towards 4,200 to 4,300 level on the S&P 500.

By the end of the year, he even sees possibility of the benchmark index hitting the 4,625 level that represents about an 11% upside from here.

For the month, the consumer prices index gained 0.1% in March versus 0.2% expected.

Fed’s rate hikes are indeed working

Core CPI (excluding food and energy), on Wednesday, was reported up 5.6% versus last year and 0.4% month-over-month, both in line with expectations.

Simply put, today’s data suggests that inflation is still well above the 2.0% target but the Fed’s rate hikes are at least resulting on continued deceleration. On CNBC’s “Worldwide Exchange”, Johnson added:

It’s historically been a bullish sign and the market is 83% of the times higher with 13.7% annual return when you don’t break below December lows in the first quarter of the new year. That’s exactly what’s happened this year.

The U.S. Federal Reserve is scheduled for its next policy meeting in early May. For the year, the equities market is up 8.0% at writing.