Weekly Market Update & SPY Technical Analysis
Its a new month of markets, but nerves are high coming into the first week after Friday’s inflation data showed an uptick in month over month inflation. The Personal Consumption Expenditures Price Index (PCE) moved from 2.4% to 2.5% between January and February, a small change, but in the wrong direction. Markets have been riding the high of an interest rate cut at some point this year, but The Fed have been clear about needing to see inflation at or below 2% before loosening their policy. 2.5% is still a better number than the 9%+ we saw about a year ago, but the next few inflation reports must not continue the uptrend.
Coming into this week the focus shifts from inflation data to the labor market and The Fed. The U.S. unemployment rate will be released on Friday and expectations are that it will remain around the 3.9% we saw last month. The labor market has been exceptionally strong during the rate hike cycle, which is good for the U.S. population, but it’s making inflation more sticky. The Fed has done a good job of bringing inflation down while keeping unemployment low, which is a path that many doubted was possible, but it’s proving to be so far. Members of The Federal Reserve will be speaking everyday this week so markets will be on watch for comments about their outlook for the year and interest rates.
SPY technical analysis:
SPY and other parts of the market continuously made new all time highs in March, but we’re noting weakening relative strength in the last week. This doesn’t necessarily mean a reversal is coming, but it is something to keep in mind going into a new month. SPY’s highs reached 524.61 before pulling back so that’s our main resistance in focus coming into this week. Buyers need a move above that to push to 528.00-530.00.