Why Fundstrat Predicts a Major Stock Market Rally After the Inflation Report is Released

According to Fundstrat's Tom Lee, the release of the July Consumer Price Index (CPI) report on Thursday is expected to spark a significant stock market rally. While consensus estimates predict Core CPI to be 0.22%, Fundstrat's data science team believes it will fall short at 0.15%. Lee attributes this projected undershoot to the decline in used car prices, which is a major contributing factor to CPI. A cooler-than-expected CPI report would solidify the notion that the Federal Reserve has completed its interest rate hiking cycle, potentially prompting a stock market rebound. Furthermore, investor sentiment has turned negative due to recent economic uncertainties, making the possibility of a stock market rally even more likely.