Weekly Stock Market Update & SPY Technical Analysis
Markets shrugged off fears of rising inflation last week and continued to set records, pointing to the undeniable strength buyers have in the current environment. Although inflation didn’t increase on the consumer end, it did on the producers’ side. The Producer Price Index (PPI) rose to its highest level in three years, sparking fears that tariffs are beginning to work their way into costs. The initial reaction to the report was negative, but markets recovered as hopes for a ceasefire between Ukraine and Russia eclipsed the economic data. Perhaps because a ceasefire would bring global prices of food and energy down, making it an optimistic solution to inflation.
Also on the economic front from last week, U.S. retail sales bounced back for the second consecutive month, with the largest increases in sales at motor vehicle and parts dealers, future stores, sporting goods, and clothing. The U.S. consumer is most important part of economic growth, making up for a large portion of the GDP. So consumer habits are key to watch, and being attentive to where spending is increasing can foreshadow which stocks and sectors to watch and invest into. This is why economic data is at the core of our investment thesis.
Coming into this week, we’ll get a deeper insight to where consumers are spending their money. Big box and specialty retailers such as Home Depot, Target, Walmart, and others are set to report earnings throughout the week. Investors will especially listen for the impact of tariffs over the past three months and for consumer behavior at the stores. Profit margins are likely to be affected, largely because these companies are highly sensitive to higher tariffs. We’ll be updating any standout earnings throughout the week as the numbers are released to our Hyper Stocks Pro members.
Apart from retail earnings, this week is light on reports and data. Investors may enjoy a week with no catalysts and just focus on price action. The general market is still in a bullish trend and the volatility index (VIX) is trading near its 52-week lows. This sets the stage for another push, but investors should remain cautious over the next 4-5 weeks as September is historically known to be a highly volatile month. We’ll continue adjusting our strategy depending on developments.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of capital. Always do your own research or consult with a licensed financial advisor before making investment decisions.