The S&P 500 Tests 5,300 Resistance Amid Easing Inflation Trends

The S&P 500 has reached a pivotal moment, testing the 5300 level amidst recent inflation data releases. This development occurs as the Federal Reserve and market participants analyze the latest economic indicators, sparking discussions on potential interest rate adjustments.

Inflation Trends and Market Impact

Recent inflation figures revealed a significant slowdown, with the core Consumer Price Index (CPI) climbing only 0.3% in April. This represents a major decline from prior months and the first slowdown in six months. The core CPI climbed by 3.4% year on year, the slowest pace in three years, owing mostly to rising shelter and gasoline prices. Furthermore, retail sales remained flat in April, reflecting high borrowing prices and cautious consumer spending.


The softer inflation data boosted market optimism, leading to a rally in US stocks. The S&P 500 rose 1.2%, closing above 5300 points for the first time. Technology, real estate, and healthcare sectors led the gains, while consumer cyclicals lagged. Similarly, the Nasdaq Composite hit a record high, driven by strong performances in technology stocks.

Federal Reserve’s Position

The latest US CPI report has provided some relief to Federal Reserve officials, who have been under pressure to rein in price increases. Fed Chair Jerome Powell emphasized the need for patience, suggesting that interest rates might not be cut immediately. However, market participants are increasingly betting on a potential rate cut later in the year, with the odds of a September cut rising to about 60%.

Kathy Jones, Chief Fixed-Income Strategist at Charles Schwab, commented, “It does open the door to a potential rate cut later in the year. It will take a few more readings indicating that inflation is coming down for the Fed to act.”

Upcoming Economic Indicators

This week’s upcoming Personal Consumption Expenditures (PCE) price index will be closely watched. The PCE is expected to reflect the recent CPI trends but may show a softer increase due to its different weighting.

Market experts, including economists and strategists, anticipate that continued moderation in inflation could lead to a more accommodative Fed policy. However, the persistence of high shelter costs remains a concern. A sustained decline in inflation could boost consumer and business confidence, potentially leading to increased spending and investment. Conversely, if inflation proves sticky, the Fed may have to maintain higher interest rates for longer, slowing economic growth.

2H 2024 Inflation Outlook

Key data to watch includes the next CPI and PCE reports, along with employment figures and Fed statements. These will provide further insights into the inflation trajectory and the Fed’s policy stance.

David Rosenberg, Chief Economist at Rosenberg Research, stated, “The latest inflation data is a positive step, but we need to see sustained improvement before the Fed changes course. Investors should brace for potential volatility as the market adjusts to new economic realities.”


As the S&P 500 tests the 5300 resistance level, the market remains cautiously optimistic. The deceleration in inflation is a promising sign, yet the future trajectory of the Federal Reserve’s monetary policy remains uncertain. Investors should stay vigilant, monitoring upcoming economic data and Fed communications to navigate the potential volatility and capitalize on market opportunities.

S&P 500 Long (Buy)
Enter At: 5362.81
T.P_1: 5447.10
T.P_2: 5545.61
T.P_3: 5656.45
T.P_4: 5754.27
T.P_5: 5876.87
S.L: 4833.94

S&P 500
S&P 500
S&P 500
S&P 500

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