Investors are embracing an extended three-day weekend after last week’s spree of events. To recap, here are the key events that took place last week:
CPI and PPI Data: Inflation on both the consumer and producer ends ticked up in January, with CPI at 3% and PPI at 3.5%. This was the first time CPI hit 3% in seven months, sparking concerns that progress toward the 2% target is off track. Many blame the sharp rise in egg prices for the uptick in inflation, but even core inflation, which excludes volatile items like food and energy, surged 0.4% month over month. The data further increased uncertainty about interest rate cuts this year.
On the subject of interest rates, several Federal Reserve members spoke last week, with the most prominent being Fed Chair Powell’s testimony to Congress. Powell didn’t introduce any new information; he mostly reinforced what investors already knew, stating that the Fed is in no hurry to cut rates and will continue making decisions based on developing economic data.
Also last week, the latest Retail Sales Data significantly missed estimates, coming in at -0.9% versus the expected -0.2%.
Heading into this week, investors are preparing for more Fed speakers, scheduled every day during the four active trading days. The Fed will also release its FOMC Minutes report, which will recap what was discussed in its last meeting, though it is unlikely to introduce anything new.
SPY Technical Analysis:
Friday’s trading volume was especially low ahead of the three-day weekend, but the index still managed to hit a new all-time high of 611.15 before pulling back, making that our primary resistance level to watch this week. A move above that would be considered a “blue sky” breakout with no resistance in sight.