This week’s main market event comes on Thursday with the release of the June consumer price index report, which could shed light on when the Federal Reserve will cut interest rates. Economists polled by Dow Jones expect CPI to have risen 0.1% month over month in June and 3.1% year over year. Core CPI, which excludes volatile food and energy prices, is forecast to have expanded 0.2% month over month and 3.4% year over year. The report could inject near-term volatility into the stock market, particularly with equities at record highs. .SPX YTD mountain SPX year to date Against this backdrop, traders at JPMorgan broke down how they expect the S & P 500 to react to the report, based on six scenarios: 35% chance — CPI rises 0.15% to 0.2% month over month: The S & P 500 would rise 0.5% to 1% as it would make “calls for a September cut become deafening,” the traders said. “One key is whether any of the decline is attributed to shelter prices since this has been a source of the stickiness and any material step-down here is well received and may portend even more disinflation.” 30% chance — CPI increases 0.2% to 0.25%: “Here the decimal places matter to the initial reaction as a 0.25% rounded to 0.3% could be initially negative but a 0.2% print on the screen is likely viewed positively,” JPMorgan traders wrote. The S & P 500 would increase 0.25% to 0.75% under this outcome. 15% chance — CPI rises 0.25 to -0.3%: The S & P 500 would drop 0.75% to 1.25% under this scenario, as such a report could show shelter prices increasing. 15% chance — CPI gains 0.1% to 0.15%: This outcome would be viewed favorably by investors as it could signal accelerating “goods disinflation.” The S & P 500 would jump 1% to 1.5%. 2.5% chance — CPI rises more than 0.3%: Such a hot inflation report would spark a 1.25% to 2.5% sell-off in the S & P 500, JPMorgan traders think. This is “the first tail-risk scenario, where we would likely see Core Goods deflation reverse to push the monthly number higher. Depending on the magnitude of the print and last week’s weak growth prints, you likely see the markets shift towards recessionary narrative, at best, and a stagflationary narrative, at worst,” they said. 2.5% chance — CPI rises less than 0.1%: This additional tail risk would drive a 1% to 1.75% surge for stocks, with JPMorgan traders noting it would “likely pull-forward some calls for a July cut.”