Next week’s inflation data could derail a market that appears to be priced for perfection, ahead of the Federal Reserve’s meeting later this month. The November consumer price index set to release Wednesday is expected to show an increase of 0.2% and 2.6% month on month and year over year, respectively, according to FactSet. If that’s the case, it would mean no change from the prior month , but also show stubborn inflation. A surprisingly hot report could curtail hopes for a December rate cut from the Fed. The CME Group’s FedWatch tool shows an 87% probability of lower rates this month after the release of new U.S. jobs data on Friday. Strong inflation data would also throw a wrench in the recent stock advance. The rally shows no signs of slowing down, but it’s also expensive, spurring investors to cast about for something that could go wrong. “For all of 2023, and the first half of 2024, the CPI moved markets, and it has the potential to do that again,” said Jay Woods, chief global strategist at Freedom Capital Markets. “I don’t think we’re going to see this rally spike much higher because of the CPI number, but given the run we’ve been on, it does have the potential to let us retrace a couple percent — 2%, 3%.”‘ The P/E ratio in the S & P 500 has risen to 26, a level that is 32% greater than the average P/E in data going back to 1989, according to Oppenheimer. Still, that doesn’t mean investors expect any pullback to last long. Even with a number of hurdles to get through on the calendar between now and the end of the year — including the FOMC meeting — a strong fundamental setup, and buoyant investor optimism, has observers expecting stocks could recoup any losses, and end the year still higher from here. “Once we’re through these events, investors can actually then invest into sort of that Christmas, Santa Claus, rally, so I think 6,300 is still very doable,” Tom Lee, head of research at Fundstrat Global Advisors, told CNBC’s ” Squawk on the Street ” on Thursday, referring to where he expects the S & P 500 is headed. “Buy the dips.” Similarly, Freedom Capital’s Woods expects the S & P 500 could end the year around 6,220, even if the rally is hit with some “cold water” between now and Dec. 31. This week, a tech-heavy advance helped the S & P 500 and Nasdaq Composite gain about 1% and 3.3%, respectively. The Dow Jones Industrial Average is the lone benchmark that notched a losing week, down 0.6%. Market euphoria Part of this week’s advance has to do with the surprising gains in mega-cap tech after Salesforce’s results exceeded expectations and showed strong promise for the company’s artificial intelligence products. That revived interest in a tech trade some expected was over, and bolstered confidence in the market as money continues to rotate in and out of the different sectors. The Technology Select Sector SPDR Fund (XLK) this week notched its first record high since July , rallying 3%. “We’re seeing rotation from sector to sector, and now we’re seeing rotation within the sectors,” Woods said. And to me, this is very fascinating, because money is not leaving the market. Money is staying in the market.” There will be more tech earnings results in the week ahead. Oracle is set to release results Monday, Adobe on Wednesday, and Broadcom reporting Thursday. To be sure, with some more risky parts of the market rallying, some investors worry the market is getting too frothy. For example, Bitcoin topped $100,000 this week , and some project t could top $200,000 in a year’s time. Cathie Woods’ Ark Innovation exchange-traded fund (ARKK) has advanced 7.8% this week. The rise in bullish sentiment also has contrarians anticipating the other shoe will soon drop, as they investors could be done with buying stocks. The American Association of Individual Investors noted bullishness over the next six-month outlook jumped to 48.3% in the week ended Wednesday, above the 37.1% from the prior week, and more than the historical average of 37.5%. But for now, with the outlook for next year’s earnings growth story intact, investors expect there’s still upside for the market heading into next year — at least in the first half. “What I think is going to happen in 2025 is we start to get a little euphoric,” Woods said. Week ahead calendar All times ET. Monday Dec. 9 10 a.m. Wholesale Inventories final (October) Earnings: Oracle Tuesday Dec. 10 8:30 a.m. Unit Labor Costs final (Q3) 8:30 a.m. Productivity final (Q3) Earnings: AutoZone Wednesday Dec. 11 8:30 a.m. Consumer Price Index (November) 8:30 a.m. Hourly Earnings (November) 8:30 a.m. Average Workweek final (November) Earnings: Adobe Thursday Dec. 12 8:30 a.m. Continuing Jobless Claims (11/30) 8:30 a.m. Initial Claims (12/07) 8:30 a.m. Producer Price Index (November) Earnings: Broadcom , Costco Wholesale Friday Dec. 13 8:30 a.m. Export Price Index (November) 8:30 a.m. Import Price Index (November)