Weekly Market Insights
Most major indexes finished the week higher, including the Dow, S&P 500, Nasdaq, and the small-cap Russell 2000. The only exception was the mid-cap S&P 400, which saw a minor dip of just 0.25%. Notably, the S&P 500 came very close to reaching a new all-time high, but ended the week with its highest close to date. Similarly, the Nasdaq also posted its highest weekly close of the year, underscoring the market’s positive momentum despite some headwinds.
While the inflation data last week came in hotter than expected, it wasn’t a cause for major concern, though it demonstrated once again, with a slight uptick in the data, that progress on reducing inflation has slowed. The Fed continues to believe the path to its 2% inflation target remains intact, but that timeline has been extended. Meanwhile, the economy continues to show strength, with the market shifting its focus away from rate cuts and back toward growth and earnings, which seems to have been well received. Concerns over tariffs, particularly those on China and other countries like Canada and Mexico, eased as some were delayed or less severe than anticipated. Despite rising inflation and tariff uncertainties, the market continues its march toward new highs, driven by a resilient economic outlook and better-than-expected earnings reports.
Tariff developments were a key driver in commodity markets last week, with industrial metals climbing on supply concerns and gold surging to record highs as inflation pressures mounted. Oil struggled amid elevated inflation readings and fading geopolitical risks. Bond yields saw significant swings, with the 10-year Treasury yield jumping to a multi-week peak following the CPI report before retreating sharply to end the week lower. Meanwhile, uncertainty surrounding tariff specifics and market doubts over Trump’s commitment to enforcing them pushed the dollar to its weakest level since mid-December.
This holiday-shortened week’s economic calendar is relatively light, with the main focus on Wednesday’s Fed minutes, where investors will seek insights into how many officials support pausing rate cuts. The key concern remains inflation and whether Fed policymakers believe it is still trending toward the 2% target, as greater confidence in that trend increases the likelihood of rate cuts in 2025. In terms of economic data, the most significant reports will be the Empire Manufacturing Survey on Tuesday and the Philly Fed on Thursday, offering an early glimpse into February’s economic activity. Investors will be watching closely to assess whether ongoing tariff threats and trade volatility are beginning to impact the manufacturing sector.
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Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The statements contained herein are solely based upon the opinions of Edward J. Sabo and the data available at the time of publication of this report, and there is no assurance that any predicted or implied results will actually occur. Information was obtained from third-party sources, which are believed to be reliable, but are not guaranteed as to their accuracy or completeness.
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