{"id":12739,"date":"2025-09-10T18:32:09","date_gmt":"2025-09-10T18:32:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/12739\/"},"modified":"2025-09-10T18:32:09","modified_gmt":"2025-09-10T18:32:09","slug":"stock-market-outlook-how-much-sp-500-could-drop-on-hot-inflation","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/12739\/","title":{"rendered":"Stock Market Outlook: How Much S&P 500 Could Drop on Hot Inflation"},"content":{"rendered":"

The stock market<\/a> has a key hurdle it needs to clear this week. <\/p>\n

While investors have mostly shrugged off bad news in the US job market<\/a>, equities are about to be tested by coming consumer inflation data, according to Dubravko Lakos-Bujas, the global head of market strategy at JPMorgan.<\/p>\n

Should inflation<\/a> figures come in hotter-than-expected in the coming months, that could send the S&P 500<\/a> tumbling as much as 8%, Lakos-Bujas said in a note to clients on Wednesday, speculating the benchmark index could fall to 6,000-6,200 in the bank’s “downside” scenario.<\/p>\n

Stocks continue to cruise at all-time highs, sidestepping concerns about weak job growth<\/a> in the last several months. That’s partly because investors look like they’re pricing in a “Goldilocks scenario<\/a>” for stocks, Lakos-Bujas said, referring to optimism that the economy will be cool enough to welcome Fed rate cuts, while remaining resilient enough to avoid a recession.<\/p>\n

That, combined with the S&P 500’s historic run-up since Donald Trump’s tariff announcements in April, is enough reason for caution, Lakos-Bujas wrote.<\/p>\n

“After one of the strongest rallies in decades, we would recommend near-term caution with the market pricing in aggressive rate cuts at a time when inflation prints are expected to ramp up, investor positioning is elevated, and Sept-Oct performance is seasonally weak<\/a>,” he said.<\/p>\n

The next test could be just around the corner, with markets set to digest the August Consumer Price Index<\/a> report on Thursday morning. Economists expect inflation to have risen 0.3% for the month and 2.9% on a year-over-year basis, slightly cooler than the 3.1% yearly increase in July<\/a>.<\/p>\n

“If inflation comes in hotter this week, we see the current goldilocks market positioning at risk of correcting,” Lakos-Bujas added.<\/p>\n

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Producer prices, a measure of wholesale inflation, came in cooler than expected for August, dropping 0.1% for the month. But JPMorgan economists expect overall inflation to pick up in the coming months, Lakos-Bujas said.<\/p>\n

“Generally, rising inflation<\/a> is the worst backdrop for equities when compared to falling or stable inflation phase,” he added, noting that, historically, the S&P 500 rose an average 2% when inflation was rising, compared to the average 12% increase when inflation was cooling in the economy.<\/p>\n

JPMorgan remains\u00a0bullish on equities<\/a>\u00a0overall. The bank sees the S&P 500 reaching 7,000 by early next year, implying a 7% upside over the medium term.<\/p>\n

In the meantime, JPMorgan said it believed low volatility stocks and quality growth stocks<\/a> were some of the areas that could outperform in the short term. Across sectors, it has a preference for mega-cap tech stocks, pharma stocks, and defense stocks, as opposed to areas of the market that are more sensitive to interest rate changes, Lakos-Bujas said.<\/p>\n","protected":false},"excerpt":{"rendered":"The stock market has a key hurdle it needs to clear this week. While investors have mostly shrugged…\n","protected":false},"author":2,"featured_media":12740,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[72,61,60,123],"class_list":{"0":"post-12739","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-ie","10":"tag-ireland","11":"tag-markets"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/12739","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=12739"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/12739\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/12740"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=12739"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=12739"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=12739"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}