S&P 500 trades flat after US inflation data

• The S&P 500 lost 0.10% at the start of the American session.
• The Consumer Price Index (CPI) stood at 2.9% year-on-year in July, a lower-than-expected result.
• Core CPI came in at 3.2%, in line with consensus.
• Investors will be keeping an eye on tomorrow’s Retail Sales release.

The S&P 500 hit a session low of 5,425, finding buyers that took the index to a daily high of 5,448. At the time of writing, the S&P 500 is trading at 5,428, down 0.10% on the day.

Inflation data has moderated, showing a consistent decrease over the last four months

According to data published by the US Department of Labor, the Consumer Price Index has moderated to 2.9% in its annual reading, one tenth lower than the previous and expected 3.0%. This result shows a downward trend in inflation since April.

The core CPI, which does not include food or energy, rose by 3.2%, in line with the consensus and below the 3.3% recorded in June.

Based on the CME Group’s FedWatch tool, the probability of setting the interest rate between a range of 5.00% and 5.25% is 58.5%, compared to 41.5% of setting the rate between a range of 4.75% and 5.00%.

Participants will focus on tomorrow’s retail sales data, which is expected to rise by 0.3% in July.

Levels to consider in the S&P 500

The S&P 500 formed support at 5,090, given by the pivot point from August 5th converging with the 23.6% Fibonacci retracement. The first resistance lies at 5,561, in confluence with the 78.6% Fibonacci retracement. The next key resistance lies at 5,667, given by the high from July 16th.

S&P 500 daily chart