Equity markets extended their rebound another day, lifting the S&P 500 by 0.5% on Tuesday. The move was driven by intensifying hope that the FOMC would cut interest rates soon, a hope that may take the broad market index to a new high. The index is on track to hit and exceed the all-time before the end of the year and could produce a solid Santa Claus Rally next week. The caveat for investors and traders is that the FOMC may not cut rates as quickly as hoped, and data that could alter the outlook is due this week.

This week's release of November inflation data will help push the S&P into its next move, setting new all-time highs or topping out. The market expects the PCE data to show cooler inflation than last month and year and may be disappointed with the results. The CPI index showed inflation holding steady and at levels well above the Fed's target rate, which should be expected from the PCE. The takeaway is that inflation is cooling but still running hot compared to the 2.0% target rate and will keep the FOMC in a hawkish stance for the foreseeable future.