Weekly Market Update & SPY Technical Analysis
All-time highs have become a regular theme this year, but last week was particularly historic as the S&P 500 broke above 6,000 for the first time. What began as a year of skepticism has turned out remarkably well for investors, with the S&P up 26% year-to-date and other major indexes following suit. With just under two months remaining, the probability that markets will finish the year strong appears high.
Last week, markets reacted to a contentious election and newly set interest rates, both of which proved bullish for investors. The “Trump Trade” was in full swing following the election results, lifting financial and crypto markets. This reminiscent rally has some investors wondering if the surge is simply a reflex or the start of a sustainable trend. For now, the narrative favors the bulls. At last week’s FOMC meeting, the Fed cut interest rates again and signaled further loosening if economic progress continues, reinforcing market optimism and pushing indexes near all-time highs by Friday’s close.
Looking ahead, inflation data and U.S. retail sales will be key. The Consumer Price Index (CPI) is set for release Wednesday morning, which will be critical for tracking inflation. Projections indicate a slight month-over-month rise in inflation, from 2.4% to 2.5%, while core CPI, excluding food and energy, is expected to hold at 3.3%, still above the Fed’s 2% target. Although markets seem to be overlooking this elevated core number, it’s an important indicator for economists monitoring inflation progress.
U.S. retail sales are anticipated to slow, with month-over-month growth expected to slip from 0.4% to 0.3%, aligning with the year’s average pace. Sales figures are likely to stay subdued until the holiday season picks up.
Finally, several Fed officials, including Jerome Powell, are scheduled to speak this week. Their comments will be watched closely for insights into the Fed’s stance on the economy and future monetary policy.