Last week brought more sticky consumer inflation and a Fed message indicating a holding pattern on rate cuts, making it an opportune time to share an overview of what happened and what’s ahead. Read on for a bite-sized summary of what you should know.

Weekly Stock Index Performance

Major U.S. stock market indexes rose for the week ending 02/14:

• The S&P 500 increased by 1.47%.
• The Nasdaq 100 traded higher by 2.90% (a weekly all-time closing high).
• The Dow Jones Industrial Average increased by 0.55%.

Hot January Inflation 

• Headline January Consumer Price Index (CPI) data showed a monthly increase of 0.5% for January (hotter than expectations of 0.3), equaling a 3.0% year-over-year inflation rate, up from 2.9% in December.
• Markets initially reacted to the downside, with the data bolstering the case for the Fed to remain neutral for longer, but stock indexes recouped ground by the end of the week.
• Headline January Producer Price Index (PPI) data showed a rise of 0.4% on the month and a year-over-year increase of 3.5%, exceeding estimates of 0.3% and 3.2%, respectively. This data was also hot, with some encouraging data under the hood tied to the Fed’s preferred inflation gauge, Core Personal Consumption Expenditures (PCE).

Fed & Interest Rates

• In a two-day speech to Congress on monetary policy, Federal Reserve Chair Jerome Powell reiterated that the Fed is in no hurry to cut rates again anytime soon and will have to see more progress on inflation before doing so.
• On the heels of hotter-than-expected inflation data, markets pushed out rate cut probabilities to September, so on-the-fence homebuyers may have some food for thought.
• However, in a week of up-and-down trading, the 10-year note yield ended slightly lower as mortgage rates reached two-month lows.

Divided Shopping Carts

• January retail sales data showed some post-holiday hangovers, with sales declining by 0.9% for the month versus Dow Jones estimates of a 0.2% decline.
• Some analysts call the larger-than-expected monthly decline “deceptive” and cite severe weather as a cause.
• Many folks focused on the strong year-over-year increase, even though the data indicates the largest monthly drop in two years.

The Week Ahead

• Overall, this Presidents’ Day-shortened trading week will be light on economic data, but D.C. will most likely continue being active with policy change.
• In terms of the key releases, the focus will be on the January Fed meeting minutes to be released on Wednesday, flash manufacturing and services data on Thursday, and consumer sentiment data incoming on Friday.
• Eyes will also be peeled on the revised consumer sentiment data after the preliminary reading showing weakness amid tariff concerns. Will the consumer shake off the post-holiday spending jitters and keep on buying? Maybe not eggs!

That’s it for this week’s update! If you’d like to delve into these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out.

The Trademark Capital® Team

This material is intended for informational purposes only and should not be construed as legal, accounting, tax, investment, or other professional advice. Trademark Capital’s investment strategies are built using quantitative, proprietary algorithms that are designed to identify and react to changing market conditions. However, investors should be aware that no investment strategy or risk management technique can guarantee returns or eliminate risk in any given market environment. As with all investments, Trademark Capital Management’s investment strategies are subject to risk and may lose money. The investment strategies presented are not appropriate for every investor and individual clients should review with their financial advisors the terms and conditions and risk involved with specific products or services. Due to our active risk management, our managed portfolios may underperform during bull markets. Past performance is no guarantee of future results.