The euphoria seen in the US stock market after the announcement of October US CPI data seems to have faded away. Last week, S&P 500 posted its best weekly performance since June but US stocks closed down lower on Monday.

US futures, however, on Tuesday looks promising on the back of positive news from China.

Earlier, the inflation reading was welcomed by investors, who anticipated that the Federal Reserve would soon ease off on its aggressive tightening exercise. The equities, last week, received some comfort and support as the October consumer price index report came in better than expected.

However, that sentiment seems to have been whitewashed after Fed officials reiterated their stand to continue taking steps to bring inflation under control. To reach the Fed’s target inflation rate of 2% on average, there is still a long way to go. Fed governors have been gathering in order to dispel any market optimism that a true pivot is imminent.

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During a Bloomberg event in Washington, Fed Vice Chair Lael Brainard said that it would be appropriate ‘soon’ for the central bank to slow its pace of interest-rate hikes. This temporarily improved sentiment. However, she also emphasized that the Fed needed to do additional work to reduce inflation, which put some investors on edge. Brainard did not specify a step-down to a half-point hike in December, nor did she clarify what she meant by ‘soon’.

Earlier, Federal Reserve Governor Christoper Waller disputed predictions that the US central bank was reaching the end of its rate-hike cycle. Also, according to Christopher Smart, chief global strategist at Barings and head of the Barings Investment Institute, last week’s CPI-fueled rally, which propelled the S&P 500 to its best week since June, may be unsustainable.

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The real reason could be this – the economy is still not out-o-the woods. In fact, the extent of damage to the economy is also not known completely. The data will probably be muddled and conflicting in the months to come in an economically unpredictable period. The impact of rate hikes is to be seen with a time lag and the effect on the economy, individuals, businesses can be seen in the quarters ahead.

Markets may not be in a tearing hurry after Powell’s message on the day Fed FOMC hiked the rate by 75 basis points on November 10. Powell’s signal to the market has been two-pronged – Fed may consider slowing down the pace of rate hikes depending on incoming data and secondly, the terminal rate could be much higher than what the market is expecting.

Meanwhile, Former US President Donald Trump is expected to make an announcement on Tuesday. Speaking on Wednesday are Lael Brainard, Gary Gensler, and John Williams of the Fed. Also, US housing starts, initial jobless claims data comes on Thursday. The US stock market investors may continue to witness volatility this week too.