"Super Tuesday" strikes! CPI, major bank financial reports, and Wash Congress' first performance caught in three-line squeeze. High US stock market welcomes a crucial pricing window.

On Tuesday, the U.S. stock market will face a series of major events, with various key data and agendas coming one after another. However, stock traders seem indifferent, this indifferent attitude puts the market in a delicate and fragile state - after all, the current U.S. stocks are hovering near historical highs. According to data compiled by Citigroup, the implied volatility of the S&P 500 index on Tuesday is approximately 0.7%. For such a major trading day, this level of expected volatility is considered moderate - on that day, not only will the crucial Consumer Price Index (CPI) be released, but also the first batch of major bank earnings reports for the earnings season, along with the testimony of the Federal Reserve Chairman to Congress, not to mention the risks brought by the escalating situation in the Middle East for GEO Group Inc. It is worth noting that this implied volatility level is basically in line with the average volatility of the past 12 CPI release days. And according to Piper Sandler's data, this calm expectation is likely to persist until Friday: based on the pricing of options on the S&P 500 index, the market is expected to have a volatility of approximately 1.1% this week, the smallest weekly expected range since December last year. This phenomenon is likely due to the traditional "summer slump" effect - major trading desks are thinly staffed, leading to thin market trading. However, the risk of insufficient liquidity is that if developments do not meet expectations, market volatility could be sharply magnified. Stuart Kaiser, head of U.S. stock trading strategy at Citigroup, said, "The current implied volatility is likely to be low. Given that the banking sector accounts for less than 4% of the S&P 500, the market generally believes that in the context of already strong earnings expectations, the impact of banking stocks on the market is relatively limited; at the same time, the influence of CPI data is not as significant as before. However, if the CPI data exceeds expectations on the upside, the market will still be punished." The trading day, filled with major events, will kick off with earnings releases from JPMorgan, Goldman Sachs, and Bank of America Corp before the market opens. Then at 8:30 PM Beijing time, the CPI data for June will be released. If the inflation reading is hot again, it could intensify concerns that the Federal Reserve may be forced to raise interest rates earlier. Then at 10PM, Federal Reserve Chairman Kevin Wash will make his first appearance before Congress as Fed chairman to deliver his testimony. Since late March, the S&P 500 index has gained about $11 trillion in market value, investors will pay close attention to any hints in his remarks regarding the policy rate path. Earnings Season Begins Over the next few weeks, a new round of earnings season will provide Wall Street with a clear picture of the earnings performance of U.S. companies, covering the three-month period ending in June. According to compiled data, earnings for S&P 500 component companies in the second quarter are expected to increase by 24% year-on-year, almost one of the best readings since the recovery following a major recession. However, the sky-high earnings expectations are facing headwinds from stubborn inflation, rising energy costs, and increasing probability of a Fed rate hike, all of which could erode corporate profit margins and suppress stock prices. Currently, the forward 12-month P/E ratio for the S&P 500 index is 20.2 times, higher than its 10-year average of 19.2 times. JPMorgan, Goldman Sachs, Bank of America, Wells Fargo, and Citigroup all released their earnings before the market opened on Tuesday, while Morgan Stanley will take over on Wednesday. Inflation Data Test Next up will be the CPI report. Investors have been turning a blind eye to inflation, which has been at a three-year high in June, but if price pressures continue, policymakers may need to turn to a more aggressive tightening stance to curb inflation. Economists surveyed expect the year-on-year CPI increase in June to be 3.8%, down from 4.2% in May. The core CPI (which excludes volatile food and energy items and is considered a more accurate measure of underlying inflation than the overall index) is expected to rise 2.8% year-on-year and 0.2% month-on-month. The most likely scenario outlined by Andrew Tyler, global market intelligence chief at JPMorgan, is that if the core CPI month-on-month increase is between 0.2% and 0.25%, the S&P 500 index could rise by up to 0.75%. Tyler wrote in a report on Monday, "As the market sees the U.S.-Iran conflict as coming to an end - or at least no longer pose a significant constraint on energy supplies - inflation expectations have eased. This may reflect a view in the market that, with the earnings season starting on Tuesday, micro factors are replacing macro factors as the main DRIVE of the index." Wash Congressional Testimony Wash will testify before the Senate Banking Committee on Tuesday and before the House Financial Services Committee on Wednesday on the semi-annual monetary policy report, providing clues to the outlook for the U.S. economy, particularly in terms of inflation, wage pressures, and employment. Traders will also be looking for any hints of additional measures the Fed may take to curb high prices. However, the appearance of the Fed chairman in Congress often has a strong political color, rather than being purely market-driven events. Wash has already signaled that he will avoid providing clear rate guidance to the market, while lawmakers are likely to pressure him for more insight on rate direction. After the June jobs report fell slightly short of expectations, traders believe the probability of a rate hike this month is close to fifty-fifty, while still pricing in expectations for a rate hike in September. Thomas Carroll, CEO of Ballast Rock Asset Management, said in an interview, "Market focus has shifted from inflation concerns back to corporate earnings, as strong profits have driven this rally. However, traders may underestimate the risk of persistent inflation, which could force the Fed to maintain high rates for a longer period."