Stocks fell sharply last Friday to wrap up their worst week so far this year, as the Federal Reserve’s preferred inflation gauge unexpectedly accelerated in January and consumer spending surged.
The core PCE price index jumped 0.6% in January and 4.7% from a year ago, coming in above economist estimates. Meanwhile, consumer spending surged 1.8% last month, the biggest increase in nearly two years.
Investors worry the figures will add pressure on Fed policymakers to keep ratcheting up interest rates. U.S. Treasury yields rose in response, with the two-year note climbing nine basis points to 4.78% and the benchmark 10-year yield adding seven basis points to 3.95%.
For whole last week, the Dow Jones dropped 3% for its fourth straight losing week, the S&P 500 shed 2.7% in its worst week since early December, and the tech-heavy Nasdaq sank 3.3%.
Chart: SPX weekly and daily
Chart: SPX daily and 15 mins
As we discussed last Friday, "I was expecting the SPX to find support somewhere around 4000ish, and close above 4040ish." Then the market will have a hammer doji(red) on the weekly chart. But instead of a hammer doji on the weekly chart, the negative core PCE and macro economy condition caused the market to open below Thursday's low and directly drop to 3940ish level. 3940ish level is already close to Bolling Band's lower line and also prior weekly support. Therefore, I think last Friday's low could be trust for Monday--Tuesday's trades. But on a weekly basis, so far still negative.
The calendar this week includes some wildcards with the potential to jolt key sectors. Tesla (
TSLA
) will hold a highly-anticipated investor event, while Chevron (
CVX
) and Goldman Sachs (
GS
) will also hold their annual strategy updates.
On the macro front, Fed speakers will be back on the circuit and economic releases include the latest on durable goods orders, the FHFA Housing Price Index, the S&P Case, construction spending numbers and speeches from the Fed's Raphael Bostic and Thomas Barkin.
The earnings schedule is also active with all Target (
TGT
), Lowe's (
LOW
), and NIO (
NIO
) all due to report.
Please feel free to express your ideas and thoughts in the comment section.
The core PCE price index jumped 0.6% in January and 4.7% from a year ago, coming in above economist estimates. Meanwhile, consumer spending surged 1.8% last month, the biggest increase in nearly two years.
Investors worry the figures will add pressure on Fed policymakers to keep ratcheting up interest rates. U.S. Treasury yields rose in response, with the two-year note climbing nine basis points to 4.78% and the benchmark 10-year yield adding seven basis points to 3.95%.
For whole last week, the Dow Jones dropped 3% for its fourth straight losing week, the S&P 500 shed 2.7% in its worst week since early December, and the tech-heavy Nasdaq sank 3.3%.
As we discussed last Friday, "I was expecting the SPX to find support somewhere around 4000ish, and close above 4040ish." Then the market will have a hammer doji(red) on the weekly chart. But instead of a hammer doji on the weekly chart, the negative core PCE and macro economy condition caused the market to open below Thursday's low and directly drop to 3940ish level. 3940ish level is already close to Bolling Band's lower line and also prior weekly support. Therefore, I think last Friday's low could be trust for Monday--Tuesday's trades. But on a weekly basis, so far still negative.
The calendar this week includes some wildcards with the potential to jolt key sectors. Tesla (
TSLA
) will hold a highly-anticipated investor event, while Chevron (
CVX
) and Goldman Sachs (
GS
) will also hold their annual strategy updates. On the macro front, Fed speakers will be back on the circuit and economic releases include the latest on durable goods orders, the FHFA Housing Price Index, the S&P Case, construction spending numbers and speeches from the Fed's Raphael Bostic and Thomas Barkin.
The earnings schedule is also active with all Target (
TGT
), Lowe's (
LOW
), and NIO (
NIO
) all due to report. Please feel free to express your ideas and thoughts in the comment section.
