Weekly Stock Market Update & SPY Technical Analysis
The market entered correction territory last week as the broader technology sector continued to experience heavy selling. Bullish momentum was weak against the wave of selling pressure, leaving many investors uncertain about what lies ahead. Before diving into this week’s outlook, let’s recap last week’s key events.
Labor Market Developments
On the economic front, last week’s reports focused on the U.S. labor market. The unemployment rate ticked up from 4% to 4.1%, while the economy added 151,000 jobs—falling short of the 170,000 forecast. A wave of federal government layoffs contributed to a rise in new jobless claims, which climbed to 221,000 for the month. Additionally, corporate downsizing continued, with Starbucks and Disney both cutting more than 5% of their workforce.
Despite ongoing economic challenges, the labor market has remained surprisingly resilient in the face of elevated interest rates. However, as growth projections weaken, concerns over rising unemployment persist. For now, last week’s data has helped ease those fears.
Trade and Tariff Impacts
On the trade front, the Trump administration temporarily rolled back auto tariffs, offering a brief boost to market sentiment. However, the uncertainty surrounding future tariff policies kept investors on edge. The one-month pause was insufficient to restore confidence, especially as economic indicators continue to point downward.
The trade deficit widened to 34%—the largest since 1992—driven by a surge in imports as companies stockpile goods ahead of potential tariff increases. This imbalance suggests that the U.S. is importing far more than it is exporting, a factor that could weigh on GDP growth for the quarter and possibly lead to stagnation or contraction.
This Week’s Market Focus
Looking ahead, markets will turn their attention to key inflation data. The Consumer Price Index (CPI) and Producer Price Index (PPI) reports are set for release, with core CPI expected to edge down slightly from 3% to 2.9%. Core CPI excludes volatile items like food and energy, meaning essential household costs—such as eggs and coffee, which continue to frustrate consumers—won’t be reflected in the reading.
Additionally, the preliminary March Consumer Sentiment report will be released on Friday. Expectations suggest a another reading in the mid 60s, a significant drop from the December highs of 74. A weakening sentiment could signal broader concerns about economic stability moving forward.
SPY Technical Analysis:
SPY retested two critical points last week, the first one being the 200 day moving average, a level not seen since October 2023. At that time, the index reversed to continue a rally that spanned more than a year, so many investors are hoping that buyers are able to defend the moving average as they did on Friday. Friday’s price action broke below the moving average, led SPY to 565.00 before it bounced to force a close back above the line. That makes 565.00 and the 200 MA the primary supports in focus coming into this week.