Weekly Market Recap: Strong Earnings, Fed Signals, and Inflation Surprises
Market Overview
U.S. equities saw broad gains despite a turbulent news cycle and shifting macroeconomic expectations. The Nasdaq led with a 2.6% weekly advance, followed by the S&P 500 (+1.52%) and Dow Jones Industrial Average (+0.65%). Markets started strong but traded sideways as investors assessed Federal Reserve Chair Jerome Powell’s semi-annual testimony and the latest inflation data.
A hotter-than-expected Consumer Price Index (CPI) briefly pressured stocks, pushing rate-cut expectations further into 2025 before soft wholesale inflation data provided some relief. Markets reacted favorably to weaker-than-expected retail sales, suggesting a slowdown in consumer spending and boosting hopes for a Fed policy shift later in the year.
Globally, European equities surged to record highs, driven by strong corporate earnings from Nestle, Siemens, and Hermes, alongside renewed hopes of a ceasefire in Ukraine following diplomatic talks between Presidents Trump and Putin. Asian markets posted their fifth consecutive weekly gain, buoyed by optimism over postponed U.S. tariffs and AI-driven stock rallies, particularly in Hong Kong (+7%). Japan, China, and South Korea also rose, while Taiwan and India lagged.
Federal Reserve Insights & Economic Roundup
The bond market saw fluctuating yields as investors weighed inflation data and Fed policy signals. Treasury yields jumped early in the week but ended slightly lower after weak retail sales data reinforced expectations of rate cuts later in 2025. The 10-year Treasury yield finished at 4.48%, while U.S. bonds posted modest gains.
In commodities, oil prices slipped after U.S. inventories increased for the fourth consecutive week, and ceasefire prospects in Ukraine eased supply concerns. Gold continued its rally, fueled by safe-haven demand amid inflation fears, though profit-taking on Friday trimmed gains. The U.S. dollar weakened, reflecting shifting expectations on tariffs and interest rates.
On the economic front, January retail sales dropped 0.9%, highlighting a post-holiday consumer pullback. Inflation ticked up to 3.0%, driven by rising shelter, energy, and food prices. A bird flu outbreak sent egg prices surging 15.2%, marking the steepest increase in a decade. Auto insurance costs continued climbing due to an increase in underinsured drivers, and travel demand pushed up airfare and hotel prices.
The Week Ahead
Key economic reports and events to watch:
- Monday: Markets closed for Presidents’ Day
- Tuesday: Empire Manufacturing Index (Feb), NAHB Housing Market Index (Feb), TIC Flows (Dec)
- Wednesday: MBA Mortgage Applications, Housing Starts & Permits (Jan), New York Fed Services Activity (Feb), FOMC Meeting Minutes
- Thursday: Philadelphia Fed Business Outlook (Feb), Jobless Claims, Leading Economic Index (Jan)
- Friday: S&P Global U.S. Manufacturing & Services PMIs (Feb), University of Michigan Consumer Sentiment Survey (Feb final), Existing Home Sales (Jan)
Investors will closely monitor Fed minutes and inflation signals for insights into the central bank’s policy path. Housing market data and consumer sentiment will also provide clues on economic momentum heading into Q2.