Inflation, Fed Meeting to Give Clues for U.S. Market Direction

by David Randall

NEW YORK, June 6 (Reuters) – Investors will closely watch next week’s inflation numbers and Federal Reserve meeting for clues on whether the soft landing hopes that drove stocks to record highs are still justified.

This year’s rally has lifted the S&P 500 up more than 12% year-to-date, on expectations the Fed can cool inflation without hurting growth. Yet recent economic data have sent conflicting signals: U.S. employment numbers released Friday were far stronger than expected, while earlier reports showed a slowdown in manufacturing and a first-quarter growth rate revised lower.

May inflation data, due next Wednesday, must walk a tightrope to satisfy expectations of a “Goldilocks economy”: satisfactory growth with prices under control. Later that day, investors will look to the Fed for signals on the central bank’s rate cut plans.

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