S&P 500 finds resistance at 4,800 points after US inflation data

• The S&P 500 finds resistance at 4,800 points at the start of the American session on Thursday.
• A decline in expectations for more aggressive rate cuts by the Federal Reserve could weigh on markets.
• Data released today from the US shows persistent inflation, with the core CPI at 3.9% year-on-year in December.

The index S&P 500 has found resistance at 4,800 points after the release of US inflation data for December. At the time of writing, the S&P 500 is trading in the daily low zone, near 4,750 points and losing around 0.60% on the day.

As published today by the US Bureau of Labor Statistics, The Consumer Price Index (CPI) of the United States has surprised with higher than expected figures for the month of December. He General CPI grew 3.4% year-on-year in December, above the 3.1% in November and the 3.2% expected by the market. On a monthly basis, inflation grew by 0.3%, exceeding the previous 0.1% and the 0.2% estimated by experts. Besides, The core CPI, which excludes volatile elements such as energy and food, stood at 3.9% year-on-year, one tenth below the previous 4%, but above the expected 3.8%. Monthly, core inflation has maintained its growth at 0.3%, as expected.

In addition, weekly claims for unemployment benefits in the United States have fallen by 1,000 during the week of January 5, standing at 202,000 compared to the previous 203,000, as published by the Department of Labor. The figure improves market expectations, since an increase to 210,000 was expected. This is the lowest number of subsidy requests seen in almost three months, specifically since the week of October 13.

Despite still persistent inflation in the US, outlook on interest rate cuts by the Federal Reserve has not changed. According to the CME Group's FedWatch tool, there is a near 69% chance of a first Fed rate cut at the March meeting.

However, Recent comments from Fed members appear to counter these expectations.. Lorie Loganpresident of the Federal Reserve Bank of Dallas, declared on Saturday that The central bank may have to continue raising its short-term interest rate to prevent the recent decline in long-term bond yields from reigniting inflation. Logan added that “a premature easing of financial conditions could allow demand to rebound” and “if we do not maintain sufficiently restrictive conditions, there is a risk that inflation will rebound, reversing the advances.” On the other hand, Michelle Bowman, Governor of the Federal Reserve, spoke at a conference on Monday and highlighted that “inflation could continue to fall with the monetary policy rate remaining unchanged for some time.” Bowman added that “will remain cautious when considering changes to the Fed's monetary policy rate” and confirmed that “I remain willing to raise the monetary policy rate at a future Fed meetingin case the progress of inflation stagnates or reverses.”

These recent more hawkish comments, along with the persistence of inflation following today's data, Could cast doubt on expectations of Fed rate cuts and weigh on stock markets.

On Friday the December Production Price Index (IPP) Headline factory inflation is expected to rise to 1.3% year-on-year from 0.9% previously, while core PPI declines to 1.9% from 2% previously.

Stronger-than-expected inflation data could show that inflation remains persistent and further dampen expectations of aggressive Fed rate cuts, weighing on investor sentiment.

S&P 500 technical levels