Stagflation Playbook for S&P 500 Gets Fresh Look Before CPI Data

As the specter of stagflation ripples through equity markets, investors are zeroing in on the upcoming consumer inflation report to see how close the dire economic scenario is to becoming a reality.

A combination of slowing economic growth and rising price pressures isn’t investors’ base-case scenario just yet. Still, the latest government reports showing hiring has cooled while services inflation resurfaced is starting to weigh on sentiment, raising uncertainty about the pace of interest-rate cuts. The latest economic data “magnifies the importance” of this week’s CPI report, JPMorgan Chase & co. strategists wrote in an August 5 note.