Can the S&P 500 make a new all-time high this week?!

The benchmark index is about 2% away from making a record high. The momentum is solid after last Friday’s strong jobs report. The market, however, will receive fresh inflation readings this week that could determine whether the bullish sentiment can stay alive.

The May Consumer Price Index (CPI) is expected to show price gains accelerated due to tariffs. Economists expect headline inflation to rise 2.5% annually in May, versus the 2.3% increase seen in April.

The core CPI is projected to increase by 2.9% over the last year, up from the 2.8% rise seen in the prior month. Monthly core prices are expected to rise by 0.3%, above the 0.2% increase seen the previous month.

Bank of America US economist Stephen Juneau expects tariffs to begin affecting inflation in goods, but “modest” effects on services and seasonal factors in the auto sector would keep inflation lower.

• “Tariffs should have a clearer impact on goods, but seasonal factors on autos and modest services will keep a lid on core [price increases],” Bank of America US economist Stephen Juneau wrote in a note to clients.

In general, Wall Street has moved on from its gloomy outlook on tariffs. President Donald Trump has shown his willingness to tone down on his tariffs if the market reacts negatively, so traders expect the final resolution to be modest.

Meaning? There are lower recession risks than previously thought.

Investors expect corporates and consumers to grow confident and post strong activity over the next few months. If that’s the case, it will support the stock market.

• “The bottom line is that while uncertainty remains high around the eventual tariff outcome, the rate of change on policy headwinds has become much less onerous.” wrote Morgan Stanley chief investment officer Mike Wilson.
• “This has reduced recession risk and is giving corporates and consumers more confidence in the forward looking outlook.”