Equity markets rallied on Thursday after another cooler-than-expected inflation report. The PPI came in below expectations and fueled hopes that inflation would soon be a thing of the past. The caveat for traders and investors is that inflation remains hot at the consumer level, and the FOMC is on track to hike rates by at least 25 basis points. The full impact of the hikes done over the past year is still not fully felt; the impact of another could tip the economy into a recession.

The S&P 500 gained nearly a full percent for the session to set a new high. The index is trading at its highest level in over a year and is set to tackle even higher levels. The next hurdle is 4,660; a new all-time high is likely if the market can move above there. The question is where the index ends the year. The expectation is for a year of flat returns. With the index showing gains for the year and moving higher, the outlook implies a correction is coming.