Major stock market indices, including the , have been range bound for three months, correcting in both time and price since Nvidia’s last earnings report in February. 

The upside is limited by concerns over valuation, the market history of contentious election years, and persistent inflation. 

On the other hand, the downside remains cushioned by a surprisingly strong earnings season, stable yields, and a resurgence of “meme-like” speculative trading, Evercore ISI strategists pointed out in a Monday note.

April saw the US stock market witness a nearly 6% sell-off, which is still considered mild compared to the historical average non-recession year selloff of 13%. During this period, the volatility index peaked at 21.36, compared to the current 13.60. 

Looking ahead, the markets are facing several key developments in the next 45 days, most notably two consumer price index (CPI) reports – of which one is set to come out Wednesday – Nvidia’s earnings and the FOMC meeting.  

Moreover, new payroll data, developments in the Middle East and Ukraine, and a likely verdict in the Trump NY trial could also make an impact on the markets.

In their note, Evercore strategists said their base case remains an ongoing correction that ultimately tests the 200-DMA in the S&P 500, which currently hovers just above 4720, before the US presidential elections. 

This suggests that the S&P 500 may see the 4,700-4,800 zone prior to the 2024 election. 

However, “the potential for further near-term upside cannot be eliminated given that Economic Surprises lie almost at the exact intersection of Goldilocks and “Too Cold”; the reaction to CPI awaits,” they added.