This data (forecasting overall CPI at 3.1% YoY, core at 3.1%, with the general consensus for core at 3.0%) is expected to have a neutral-to-negative impact on the stock market if the actual release meets or is close to expectations. Short-term pressure is possible, but volatility is unlikely to be significant. Reasons are as follows:

Why neutral-to-negative?

• Inflation rebound signal: 3.1% is a relatively high level since 2024 (a slight increase from 3.0% in September), with core inflation remaining at 3.0%-3.1%, far above the Fed's 2% target. This shows strong inflation "stickiness," especially in goods affected by tariffs, which will make the market worry that the Fed will be more cautious about rate cuts in 2026 (currently, the market prices in only 1-2 cuts in 2026; hotter data could reduce expectations).

• Market sensitivity: High inflation → Higher rate expectations → Rising bond yields → Pressure on risk asset (e.g., stock) valuations. Tech and growth stocks (Nasdaq) are particularly vulnerable due to their sensitivity to rates.

• Special context: Due to the 2025 government shutdown, October data is missing. This report lacks MoM data, only YoY. Market focus is on whether YoY is "hot." If the actual figures are exactly 3.1%/3.0%, it will be seen as in line with expectations—no big surprise but reinforcing the "inflation not fully cooled" narrative.

Potential market reactions (based on historical parallels):

• Meets expectations (most likely): Small decline or flat market. S&P 500, Nasdaq may drop 0.5%-1%; Dow more stable (supported by value stocks). Like today (Dec 18), if no deviation, markets may quickly digest and shift focus to the Fed’s 2026 path.

• Below expectations (e.g., 3.0% or lower): Bullish! Stocks rise, led by tech, supporting more rate-cut expectations, possibly triggering a year-end "Santa rally."

• Above expectations (e.g., 3.2%+): Bearish, stocks drop sharply, yields spike, risk assets sell off.

Current market backdrop

• 2025 stocks have hit multiple records, but tech recently corrected (AI concerns). A "slightly hot" CPI would amplify volatility.

Overall, if this forecast data materializes, it’s not strongly bullish for stocks—short-term pressure is likely, but if combined with holiday discounts and slightly softer actuals, it could turn positive.