Weekly Stock Market Update & SPY Technical Analysis
Volatility spiked again in the market last week as geopolitical uncertainty escalated between the U.S. and Ukraine. A heated exchange between Trump and Zelensky capped off a week of wild market swings, leaving many traders wondering how this will impact stocks in the coming week. While it may be tempting to think that the debate could cause market turmoil, the true impact is likely to be short-lived, as investors shift their focus back to what really matters—economic development.
On the economic front, last week actually brought great news for markets. The U.S. GDP reading came in line with expectations, reflecting 2.3% growth in the fourth quarter. The PCE index, the Fed’s preferred inflation gauge, showed inflation declining month over month for the first time since September. Additionally, personal income grew at a rate of 0.9%, more than double the 0.4% expectation. Personal income is especially important, as it directly impacts consumer spending and the ability to afford higher costs.
Another positive signal from last week was Nvidia’s earnings, despite the stock’s bearish reaction. Nvidia exceeded its ambitious expectations and reaffirmed strong demand for artificial intelligence, helping reassure the market that this AI-driven rally is not running on fumes. The tech sector’s bearish reaction was likely due to the results already being priced in, causing a natural pullback upon their release.
Heading into this week, investors are turning their attention to the U.S. labor market, another key element of economic progress. Many feared that higher interest rates would lead to a spike in unemployment, but that spike has yet to materialize. While there was an uptick from last year’s 3.7% low to the current 4%, it is not significant enough to suggest a recession is underway.
SPY Technical Analysis
SPY’s pullback yesterday brought the index below its 100-day moving average, a level often used by institutional investors as a buying opportunity. Buying volume increased significantly in the latter part of Friday, with the highest daily volume recorded since December. Given last week’s positive economic developments, we expect SPY to continue its recovery this week, possibly moving closer to its all-time high.