Will there be a huge shock in the US stock market after the CPI is released tonight?

According to Zhitong Finance APP, the U.S. stock market has fallen from a frenzy to the brink of a correction in just a few weeks. Now, options traders believe that the U.S. inflation data set to be released on Wednesday will once again trigger significant fluctuations in the S&P 500 index. Data compiled by Piper Sandler shows that the options market expects the S&P 500 index to fluctuate by 1.5% up and down after the release of the Consumer Price Index (CPI) report on Wednesday. This range is higher than the average fluctuation level of 0.8% on CPI release days over the past 12 months and is the largest expected fluctuation before the release of this data in at least two years. The current stock market is at a sensitive moment, with the S&P 500 index hovering on the edge of a correction—down about 9% from the historical high set three weeks ago. Strategists' views on the stock market are deteriorating, with Citigroup downgrading its outlook due to expectations of more negative data in the future; JP Morgan and Royal Bank of Canada Capital Markets have begun to downplay bullish calls; and Morgan Stanley's Michael Wilson has warned that volatility will rise. With the news of a weaker-than-expected employment report already digested by the market, the CPI has become one of the last heavyweight economic data points before the Federal Reserve's meeting next week. In the context of traders increasing bets on further interest rate cuts this year, the report is seen as key to establishing expectations for the central bank's future policy path. "Any signs that inflation is slowing less than previously expected will trigger more turmoil," said Brent Kochuba, founder of the options platform SpotGamma. Any signs of persistent inflation (or conversely, significant progress in reducing inflation) could trigger severe fluctuations in the stock market. Currently, the market generally expects the data to show a neutral result, indicating that inflation is only gradually slowing. The median forecast from Bloomberg's survey of economists shows that the core CPI, excluding food and energy costs, is expected to rise by 0.3% month-on-month in February, down from 0.4% in January. JP Morgan's Andrew Tyler team predicts that if the month-on-month increase in core CPI exceeds 0.33%, the S&P 500 could plummet by 2.5%, but they believe this scenario has only a 5% probability. The team's most likely scenario is a month-on-month increase in core CPI of 0.24%-0.28%, with the S&P 500 expected to fall by 0.5% or rise by 1%. If the increase is below 0.19%, the index could rise by 1.25%-2%. Economic Anxiety The market's sensitivity to CPI data has not been this high historically. Last year, as inflation eased and the focus shifted to employment indicators in the Federal Reserve's dual mandate, the stock market reacted relatively calmly to the CPI. Now, concerns about slowing growth under a full trade war, stubborn inflation, and uncertainty about the Federal Reserve's response path have elevated the overall implied volatility in the market. The Cboe Volatility Index (a measure of fear) has steadily climbed to nearly 30, reaching typical levels during market stress Brooke May, a partner at Evans May Wealth Management, pointed out: "If the CPI is lower than expected and triggers a rebound in the U.S. stock market, I wouldn't be surprised. However, persistently high data may shake investor confidence." "Although current volatility is still mild compared to market shocks over the past year, it has closed above 20 for seven consecutive days, marking the longest streak since August of last year. Concerns about slowing economic growth alongside high inflation are becoming a driving force behind market fluctuations