Market keeps pricing the probability of the rate cuts from the FED everyday and CPI & PCE are the main focus when doing that. this is why i say that datas like CPI and PCE have long lasting effects. Short reactions are generally caused by the headline numbers, but the report itself in detail is digested by the market for a longer time. You can see that in the yield markets & rate bets & interest rate futures.
We saw that before in 2022, markets dived so fast with every inflationary CPI & PCE data. Then reversed back and rallied after deflationist CPI & PCE. also with the help of recovering GDP data.
Nothing new, history repeats itself. Markets are focused on the interest rates from the FED and they will keep digging the CPI & PCE reports to find something optimistic/pessimistic that will fit into their narrative.
I make my own luck.
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