Weekly Market Roadmap: Can the Dip-Buying Trend Hold?
Looking Back: A Market on Edge
Last week was relatively quiet on the economic data front, with the SPX even reaching a new all-time high. But as we rolled into Friday, risk-off sentiment took over, leading to the largest de-grossing event since mid-2024—and before that, the COVID crash of 2021.
The catalyst? A mix of stagflationary PMI readings, fresh COVID headlines out of China, and reports that Microsoft might be pulling back on capital expenditures. The market reacted in classic "shoot first, ask questions later" fashion, dumping risk across the board. Small caps took the biggest hit, dropping 3% on the week, as concerns about slowing growth gained traction. Meanwhile, the S&P 500 barely held on, closing down 1.6%.
What’s Coming Up: Eyes on Inflation and Growth
This week, the spotlight turns to Friday’s PCE report—the Fed’s preferred inflation gauge. Recent producer price index (PPI) data showed softer-than-expected inflationary pressures, which suggests PCE could come in tame. That would help ease fears of a reaccelerating inflation trend, which have been rattling markets recently.
Beyond inflation, Q4 GDP numbers are also on deck. With the market narrative shifting from inflation to growth concerns, economic data—especially labor market trends—will be closely scrutinized. GDP is expected to come in at 2.3%, down from 3.1% last quarter, reinforcing the slowdown theme.
SPY: A Failed Breakout or Just Another Dip?
Keep reading with a 7-day free trial
Subscribe to Blackshore’s Substack to keep reading this post and get 7 days of free access to the full post archives.