Weekly Wrap: Mega Caps Lead, Inflation Jitters, and What’s Next
🔎 Breaking Down the Market Moves, Inflation Jitters, and What’s Ahead
Hey everyone, I hope your long weekend is off to a good start! 🎉
Before we dive into next week, let’s take a step back and break down what went down in the markets over the past few days. This week was all about the big names pulling the market higher. Mega caps led the charge, pushing the Vanguard Mega Cap Growth ETF ($MGK) up 2.5%, while the S&P 500 gained 1.5%—outpacing the equal-weighted S&P 500 ETF ($RSP), which only climbed 0.5%. The tech sector was the clear winner, jumping 3.8%, with communication services close behind at +2.0%.
Beyond the stock moves, we had a mix of economic data, tariff talk, and, of course, Fed Chair Powell’s testimony. Let’s break it down day by day.
📅 Monday: Buy-the-Dip Kicks In
We started the week strong, bouncing back from Friday’s pullback. The Nasdaq gained 1.0%, the S&P 500 rose 0.7%, and the Dow tacked on 0.4%—all thanks to some mega-cap strength and earnings tailwinds.
📈 Upgrades:
$SU got a Buy rating from Tudor, Pickering, Holt & Co.
$MBLY was upgraded to Neutral by BofA Securities ($19 PT)
$JCI got a Buy from UBS ($103 PT)
No major economic data today—just a good old-fashioned rally.
📅 Tuesday: Choppy Trading & Powell Stays Cautious
The market was all over the place, trading up and down without much conviction. Powell took the spotlight with his semiannual testimony before Congress, repeating the Fed’s “no rush” stance on rate cuts.
On the tariff front, Trump officially slapped a 25% tariff on steel and aluminum (kicking in March 12), though Australia might get a pass. Meanwhile, his reciprocal tariff plan seemed less aggressive than feared—tariffs won’t hit until at least April 1 and will be applied on a case-by-case basis.
💡 Economic Data:
The NFIB Small Business Optimism Index dropped to 102.8 (from 105.1 in December).
📉 Downgrades & Initiations:
$NET was downgraded to Sell by DZ Bank ($145 PT).
$IBM was initiated at Outperform by Oppenheimer ($320 PT).
$SNAP was downgraded to Neutral by Guggenheim.
📅 Wednesday: CPI Report Sparks Inflation Jitters
The January CPI report came in hotter than expected, and the market felt it. Core CPI (excluding food & energy) hit 3.3% YoY, up from 3.2% in December, while headline CPI rose to 3.0% YoY (vs. 2.9% prior). That sent Treasury yields spiking, with the 10-yr yield climbing to 4.64% before settling back at 4.53%.
🔻 Market Reaction:
S&P 500: -0.3%
Dow: -0.5%
Nasdaq: Managed to hold onto slight gains, thanks to some late-day dip buying in mega caps.
💡 Economic Data:
Mortgage applications up 2.3%
CPI (Jan): +0.5% MoM (vs. 0.3% expected)
Core CPI: +0.4% MoM (vs. 0.3% expected)
📈 New Initiations:
$TSLA was initiated at Buy by The Benchmark Company ($475 PT).
📅 Thursday: PPI Eases the Inflation Worries
After the CPI scare, the Producer Price Index (PPI) came in more manageable, calming nerves a bit. The S&P 500 made another run at its all-time high (6,118.71) but fell just short. Still, all 11 S&P 500 sectors ended in the green, so it was a strong session.
🔻 Bond Market:
10-yr yield: Dropped 11 basis points to 4.53% (back to where it was before the CPI spike).
2-yr yield: Down 6 basis points to 4.31%.
💡 Economic Data:
PPI: +0.4% MoM (hotter than 0.2% expected) but core PPI met expectations (+0.3%).
Jobless claims: 213K, still low—meaning companies aren’t laying off workers.
📈 Upgrades & Initiations:
$GEV initiated at Outperform by Robert W. Baird ($448 PT).
$GILD upgraded to Buy by DZ Bank ($108 PT).
📅 Friday: Retail Sales Disappoint, Stocks Stumble at the Finish Line
The market tried to push higher, but a weak January retail sales report (-0.9%) threw cold water on the rally. The S&P 500 hit 6,127 intraday—just 1 point shy of its record—before pulling back.
📉 Final Numbers for the Week:
S&P 500: +1.5% (YTD: +4.0%)
Nasdaq: +2.6% (YTD: +3.7%)
Dow: +0.5% (YTD: +4.7%)
Russell 2000: Flat (YTD: +2.2%)
💡 Economic Data Recap:
Retail Sales: -0.9% MoM (Expected: 0.0%). December revised up to 0.7% (from 0.4%).
Industrial Production: +0.5% MoM, but all the growth came from utilities (cold weather boost).
📢 What’s Next?
This week’s action was all about mega caps carrying the market, but inflation fears aren’t going away anytime soon. With the Fed still in wait-and-see mode, investors are watching every economic report for clues on rate cuts.
Tomorrow, I’ll be doing a Deep Dive technical analysis on Palo Alto Networks ($PANW) and why the stock is trading lower despite beating earnings expectations. I’ll break down the charts and see what’s really going on. Don’t miss it!
See you then! 👀 Trade smart! -EC 🎯
*Disclaimer The examples in The Options Oracle are my opinion, not financial advice.
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