Investor hopes for US soft landing ride on inflation data

U.S. stock investors are paying close attention to next week’s inflation numbers. These numbers will influence whether the recent ups and downs in the stock market continue.

People are seeing positive signs that the U.S. economy is headed for a “soft landing.” This means the Federal Reserve is finding a way to bring down inflation without hurting economic growth too much. This good news has helped the S&P 500 index go up by 16% so far this year.

But, next week’s data on consumer prices needs to strike a careful balance. If the numbers are too high, it might make people worry that the Federal Reserve will keep interest rates high for a long time or raise them even more in the coming months. This could give investors less reason to keep their money in stocks, especially after a recent drop in tech-related stocks, where the S&P 500 lost about 5% from its summer highs.

Michael Purves, who leads Tallbacken Capital Advisors, warns that the challenge of inflation isn’t over yet. He thinks signs of higher inflation might make big, high-growth companies less valuable. These companies have been driving the stock market’s recent success. Purves also says that if we’re going through a big change in how the economy grows, there might be some ups and downs we didn’t expect.

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