📈 Low CPI, Soft Landing, and a Rate Cut? The S&P 500 Could Be Entering Euphoria Phase

The May CPI surprise — headline at 2.4% and core at 2.8% — marks the clearest disinflation signal we've had all year. This isn't just data noise; it reinforces the market's bet that the Fed will pivot to cuts by September, possibly initiating a late-cycle melt-up.

🧠 Macro Implication

We now have a rare alignment: slowing inflation, resilient job market, and a Fed likely to ease before the economy cracks. Historically, this setup tends to favour large-cap equities, especially rate-sensitive sectors like tech, consumer discretionary, and comms.

📊 Market Structure

With the S&P breaking past 6,000, we're no longer just dealing with a recovery rally — this looks increasingly like a full-blown FOMO phase. Breadth is improving, volatility remains suppressed, and institutional money is rotating back into equities after being underweight for most of 2024.

🚨 Risk to Watch

The biggest near-term risk isn't valuation — it's positioning. If inflation re-accelerates (especially services) or if June's FOMC minutes lean hawkish, expect a shakeout. But unless those triggers hit, the momentum remains up.

📍My Call:

Short-term target: 6,180

Medium-term ceiling (Q3): 6,400 if Fed confirms September cut

Tactical watchlist: $Apple(AAPL)$  $Invesco QQQ(QQQ)$  $Microsoft(MSFT)$  , and semiconductors ($iShares Semiconductor ETF(SOXX)$  , $Broadcom(AVGO)$