The latest reading on the U.S. consumer price index is slated for release Wednesday, with economists polled by Dow Jones expecting a year-over-year gain of 5% for April. This will be the first CPI report since the Federal Reserve's meeting last week, when the central bank hiked rates by another quarter percentage point . Given this backdrop, JPMorgan's sales and trading team broke down five possible scenarios for how the stock market might react: 50% chance — CPI between 5% and 5.
5%: "This scenario would be a shock to the markets, but it seems unlikely that we experience a significant sell off since the spike in yields is likely muted given the bond market's fears surrounding bank contagion and the debt ceiling," JPMorgan said. The S & P 500 would lose 0.75%-1.25% under this outcome, the traders said. 20% chance — CPI between 4.7% and 4.9%: This would give investors hope that the Fed tightening cycle is complete, JPMorgan said.