After a rough week, the Standard and Poor (S&P) rallied for a second consecutive day to reclaim its losses. At the same time, tech-centric Nasdaq was able to offset declining rates for Inc. thanks to gains by tech giants Apple Inc. and Microsoft Corporation.

Retail titan Target Corporation fell hard as it reduced its profit outlook for the second time in three weeks despite a surplus of inventory. Traders balked at taking risks in light of the US Federal Reserve’s tightening measures. Things took a turn later that day as buyers came out, advancing ten of the S&P’s eleven sectors and propelling the smallcap-centric Russel 2000 up by 1.5%.

According to market strategist and portfolio manager Anthony Crescenzi of Pacific Investment Management Co., the odds of the market making a soft landing are currently in the balance, given factors like the rising cost of crude oil, among others.

Feeling the Tension

With the relevant agencies poised to release the latest US consumer price data on Friday, June 10, 2022, financial professionals are feeling more than a little uneasy and their growing uncertainty has led to see-saw activity in the markets, a rally in the equities market, and a drop of 3% in ten-year yields.

Miller Tabak + Co. chief market strategist Matt Maley remarked that the stock market presently has its sights on the Treasury market. Given that the Federal Reserve has stayed mum for most of this week and the CPI number is set to be out by Friday, stocks may teeter in both directions for several days.

Analysts also expect that the inflation reading for May 2022, also slated for release on June 10th, will aid traders in discerning the direction the Fed is heading into and whether this will continue to rise in 50-basis point increments. Likewise, data presenting a widespread hiring spree across the board may justify the Fed’s presently aggressive approach.

An Uphill Battle

Analysts also note that Fed chair Jerome Powell is currently facing an uphill climb in curbing rising inflation rates, but they are somewhat optimistic that he will succeed.

According to BlackRock’s head of iShares investment strategy for the Americas Gargi Chaudhuri, the Federal Reserve will be able to reduce inflation while preventing a recession. 

However, Chaudhuri added that he and other analysts would remain vigilant to see whether or not key factors like the employment rate, credit conditions, production, and income stay consistent with ongoing economic expansion.