The S&P 500 is trading at about 19.5 times forward 12-month earnings estimates, much pricier than its long-term average of about 15.6 times, according to Refinitiv Datastream.
"As long as CPI remains flat to trending down, the market will accept it thoroughly," said Ann Miletti, Allspring's head of active equity."If we do see upticks, it is really dependent on where the upticks are and whether or not investors believe they're temporary in nature." A stronger-than-expected inflation number next week could also boost Treasury yields further. Yields, which move inversely to bond prices, spiked this week following a downgrade of the U.S. credit rating by Fitch and on the prospect of a flood of Treasury supply in the third quarter. The benchmark 10-year yield fell sharply after Friday's jobs report but remained above 4%, a level last seen in November 2022.