(Bloomberg) -- Wall Street traders are rolling out their scenario analysis for how markets could react to the US inflation report today, predicting stocks could move 2% either way on a surprise number.

Both JPMorgan Chase & Co and Goldman Sachs Group Inc. trading desks see stocks falling some 2% if the consumer price index tops 0.4% in March on a monthly basis. However, both banks say they view any hit to the market as temporary.

“This bull market continues irrespective of what happens with CPI,” said JPMorgan’s Market Intelligence traders led by Andrew Tyler. They point to a supportive backdrop, where the economy and corporate profits are growing and the Federal Reserve is on pause.

In terms of the most likely scenario today, JPMorgan’s Tyler sees month-on-month CPI coming in between 0.2% and 0.3%, with the S&P 500 adding 0.5% to 1%, a view broadly echoed by Goldman Sachs Inc.’s trading desk. 

If the CPI data is less than 0.2%, US stocks may rise 1.5% to 2%, according to Goldman’s FICC and equities futures markets strategies team.

The consumer-price index excluding food and energy, a key gauge of underlying inflation, probably rose 0.3% last month from February, according to the median estimate in a Bloomberg survey of economists. While that would mark a step down versus the previous two months, it may not be enough to quell concerns among central bank officials looking for even lower readings.

The S&P 500 has seen some profit-taking on more hawkish comments from Federal Reserve officials, while soaring commodities prices also pose a threat to the inflation outlook.

The slight scare of the past week has seen bullish exposure ease, according to Citigroup Inc. quantitative strategists including Chris Montagu. They estimate that investors unwound $9.4 billion in long positions in US stocks last week.

Tyler’s team noted that investors have already moved to safety last week and are unlikely to sell heavily going into the earnings season. The traders are “tactically bullish” ahead of the data release.

In their view, a cooler CPI print would be a boon for risk assets. They predict hedge funds that sold stocks over multiple weeks will want to return to the market, which could propel prices higher.

“Because people are probably better hedged than they have been, a better number could squeeze us back up to the highs again,” wrote Goldman’s strategist Dominic Wilson.

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