Weekly Stocks Market Update & SPY Technical Analysis
After falling 10% from its recent all-time highs, the S&P 500 officially entered correction territory last week. Historically, investors who buy the market at a 10% correction have typically seen double-digit returns on their purchases within the following two years. However, uncertainty is higher this time, leaving many to wonder whether it's too early to buy the dip.
In reality, no one truly knows the perfect time to buy, so perhaps the real question is not when to buy, but what to buy. If you’re looking to take advantage of this market pullback, consider adding strong index funds like SPY or VOO to your portfolio. You can also follow our weekly watchlists, where we highlight fundamentally strong companies.
Shortly after entering correction territory, the market staged a strong rebound to close the week, possibly driven by better-than-expected inflation data from the CPI and PPI reports. Both the consumer and producer price indexes showed that February's inflation grew at a slower-than-anticipated pace on a year-over-year basis—the first positive economic update in some time.
As we’ve discussed, the Federal Reserve has been battling inflation through interest rate hikes. However, higher interest rates have significantly impacted consumer spending, complicating efforts to curb inflation. Last week’s Consumer Sentiment report fell to its lowest level in over two years, reinforcing economic uncertainty, particularly amid mass layoffs, high interest rates, and political instability.
FOMC Meeting & Market Outlook
This week, all eyes are on the Federal Reserve’s FOMC meeting for insights into future monetary policy. While the chances of a rate cut are near zero, Powell is not known for surprising markets. That said, there's still a 90% chance of at least two rate cuts this year, so investors will be watching for guidance on when they might occur. Volatility typically spikes when the Fed speaks, so expect some market fluctuations throughout the meeting.
SPY Technical Analysis
For the first time since October 2023, SPY is trading below its 200-day moving average, with $549–$552 acting as a key support zone. Buyers need to defend this level during this week’s events to prevent a decline toward the next support range at $540–$541. On the upside, SPY faces initial resistance at $567. To regain momentum, buyers will need to push the price back above the 200-day moving average, which would help restore confidence in the uptrend.