S&P 500 and Nasdaq volatility week: CPI plus earnings kickoff decide the next move for US indices

US stock indices head into this week at a tipping point, with the S&P 500 and Nasdaq set up for higher volatility as two major drivers collide at the same time: inflation data and the start of earnings season. After a choppy start to 2026, markets are no longer trading purely on momentum. Traders are demanding confirmation from macro data, and they are demanding it fast.

The biggest trigger is Tuesday’s CPI release. This one report can reset the entire direction of index futures because it affects interest rate expectations, bond yields, and ultimately valuation. When inflation runs hotter than expected, the market tends to price tighter financial conditions, pushing yields higher and compressing stock multiples, especially in tech. When inflation cools, risk appetite improves and the Nasdaq often responds first because growth stocks benefit the most from lower rate pressure.

At the same time, earnings season is beginning with the major banks. Even though banks are sector specific, they heavily influence overall market psychology because they provide a real time snapshot of the economy. Strong guidance from financials can support the S&P 500 by lifting confidence and improving sentiment across cyclical stocks. Weak guidance does the opposite, and can turn a stable market into a broad risk off move.

This is why indices are so sensitive this week. Traders are not just betting on company results, they are betting on the narrative. If CPI supports a softer inflation trend while earnings guidance stays strong, markets can shift into a clear risk on tone, supporting a push higher across both indices. But if CPI surprises to the upside while earnings tone turns cautious, the market can quickly transition into defensive positioning and lower index levels.

The Nasdaq remains the most exposed. Growth and AI linked stocks are priced for continued optimism, and any rise in yields can hit them hard. The S&P 500 is slightly more balanced, but it will still react sharply because indices move based on flows and sentiment, not just fundamentals.

In short, this week is a decision week for US indices. CPI will shape the rate narrative, earnings will shape confidence, and together they will determine whether the S&P 500 and Nasdaq extend higher or enter a fresh volatility phase.