The S&P 500 broad market index futures are
down 0.07% this week, retreating to 6,105 points from 6,125, just shy of the
all-time high of 6,127. The next resistance in the current upside formation
stands at 6,130–6,150 points, meaning new record highs would be necessary for
the rally to continue. This bullish momentum starkly contrasts with the
macroeconomic backdrop. U.S. inflation unexpectedly accelerated to 3.0% YoY,
the highest reading since June 2024, while core CPI rose to 3.3% YoY against
expectations of a decline to 3.1%. The negative sentiment was reinforced by
Federal Reserve Chair Jerome Powell, who stated that the U.S. economy and
labour market remain strong, eliminating any urgency to cut interest rates. The
S&P 500 fell 1.1% to 5,998 points on the news, while U.S. 10-year Treasury
yields surged from 4.49% to 4.66%.
Despite these headwinds, stocks found support
from Donald Trump, who once again called for lower interest rates. Investors
interpreted this as a potential signal for Federal Reserve action and bought
into the dip. Even with an unexpectedly stubborn producer price index—headline
PPI edged lower to 3.6% YoY, while core PPI remained steady at 3.5%—the S&P
500 rebounded by 0.96% following Trump’s comments. The president also signed a
memorandum instructing staff to develop custom tariffs for each country,
considering factors such as existing tariffs, exchange rates, and trade
balances. This suggests a case-by-case approach to trade policy, potentially
sparking trade talks across the globe over the coming months.
While the newly adjusted White House trade
stance helped push stocks higher, large investors remain cautious. The SPDR
S&P 500 ETF Trust (SPY) recorded net inflows of $394.8 million last week
but just $118.6 million this week (excluding Thursday and Friday), indicating
that institutional investors are not fully buying into the rally. If the
benchmark breaks above 6,250 points, they may enter the market, pushing the
index toward extreme upside targets of 6,650–6,750 points. Investors are also
closely watching January retail sales data, which could negatively impact
stocks.
The S&P 500 has re-established an upside
formation, with primary targets at 6,150–6,250 points. The nearest resistance
stands at 6,130–6,150 points; a break above this level would clear the path to
6,250.
In the commodities market, Brent crude
continues its downtrend, trading at $75.36 per barrel, with downside targets at
$68.00–70.00. Prices remain in a wide $70.00–80.00 range, with traders hesitant
to bet on further declines, though upside potential appears limited.
Gold prices hit a new all-time high of $2,942
per troy ounce, breaking past the $2,850–2,880 resistance. The next target
stands at $2,960–2,980 per ounce.
In currency markets, the U.S. dollar is
weakening, with EURUSD up 1.5% to 1.04600. A sustained rebound above 1.05700
could propel the pair toward 1.09500–1.10500.