Weekly Market Recap: Markets Regain Their Footing as Inflation Cools and Tech Rebounds

Market Overview

Markets navigated another volatile week as investors balanced year-end positioning with key economic and earnings catalysts. U.S. equities traded in two distinct phases—early weakness driven by valuation concerns and risk-off sentiment gave way to a late-week rebound following upbeat technology earnings and encouraging inflation data. The S&P 500 snapped a four-day losing streak, while leadership from large-cap tech helped stabilize broader market sentiment.

Internationally, European equities moved higher as easing inflation and central bank clarity supported risk assets, while Asia-Pacific markets lagged amid renewed concerns around tech valuations and slowing growth. Fixed income markets remained choppy but resilient, with bonds on track to close out a solid year. Commodities edged lower overall, though precious metals benefited from falling inflation expectations.

Federal Reserve Insights and Economic Roundup

The latest inflation data provided a constructive signal for markets and policymakers alike. Headline and core consumer inflation both rose just 0.2% over the two-month reporting period, with annual readings decelerating to 2.7% and 2.6%, respectively—the coolest inflation print in nearly five years. Several categories, including apparel, recreation, and lodging, posted outright deflation, reinforcing expectations that price pressures are easing into 2026.

Bond markets responded favorably, with yields declining before retracing some gains amid global rate volatility. Importantly, inflation expectations remain well anchored, supporting the Federal Reserve’s ability to begin cutting rates next year. While near-term inflation readings may remain uneven, the broader trend points toward moderation, aligning with expectations for gradual policy easing rather than aggressive cuts.

The Week Ahead

Monday: Chicago Fed National Activity Index (Nov)

Tuesday: GDP and GDP Price Index (Q3 second reading), Durable Goods Orders, Industrial Production, Consumer Confidence

Wednesday: MBA Mortgage Applications, Initial and Continuing Jobless Claims

Thursday: Christmas Day holiday — no economic releases

Friday: No major economic releases scheduled