The final full week of February was an interesting one for investors. The main event for the week came on Friday when the Core PCE Price Index came in at .3 percent on a monthly basis. This matched expectations and was paired with a slight drop in prices on a yearly basis.
On an annual basis, the PCE index fell to 2.5 percent while the Core PCE index fell to 2.6 percent on an annual basis. The drop has restarted calls for the Federal Reserve to engage in further interest rate cuts at some point in 2025. The most likely scenario is a cut in both October and December, but there are also signs that cuts could begin as early as June if the inflation gauge ticks closer to 2 percent.
Another key finding was that personal income went up .9 percent in January while personal spending went down by .2 percent. This may be an indication that consumer sentiment has changed for the worse. However, some say that this is merely a sign that consumers stayed home in the face of bad weather.
The other important announcement came on Thursday in the form of the gross domestic product (GDP) for the last quarter of 2024. During that time, the economy grew by 2.3 percent, which was in line with expectations and was the same as the third quarter of 2024.
Unemployment claims for the past seven days were also made public on Thursday morning. For the past seven days, there were 242,000 requests for benefits compared to a projected 222,000 prior to the release.
The S&P 500 finished the week down 93 points to close at 5,954. For the month, the index was off about 2.5 percent and is marginally lower for the year as well. On Monday morning, the index opened at its high of 6,042 and spent the rest of the next five days trending lower. On Friday afternoon, the market made its weekly low of 5,850 before gaining some ground into the close of the week.
Unlike the S&P, the Dow finished the week in the black closing higher by 274 points. It closed the week at 43,840, which was an increase of .63 percent over the last five trading days. However, like the S&P, the Dow finished the month down 2.5 percent and has also traded sideways during the first two months of the calendar year. This week, the index made a high of 43,862 on Thursday morning while it made a low of 43,162 on Friday morning.
Finally, the Nasdaq was off 3.69 percent this week to close at 18,847. This was a drop of 721 points over the past five trading days, and it represented most of the 921 points that the index lost last month. For the week, the index made its high of the week at the open on Monday of 19,548 before reversing and spending most of the next five days in freefall. On Friday morning, the market hit its weekly low of 18,409 before making up some of its losses heading into the close.
In international news, Japan announced Thursday night that its core inflation reading was 2.2 percent on an annual basis compared to an expected 2.3 percent. On Tuesday, Australia announced that its inflation rate was also lower than expected, coming in at 2.5 percent instead of a projected 2.6 percent on an annual basis. On Sunday, New Zealand announced that its retail sales were up .9 percent for the previous quarter, which was roughly double what analysts had expected.
The upcoming week will surely be another interesting one as Trump engages in new economic battles with the leaders of Ukraine, China and Canada. We will also see the release of nonfarm payroll data from February as well as the ISM Manufacturing and ISM Services indexes. Australia will announce gross domestic product numbers from the previous quarter Tuesday night while the European Central Bank (ECB) will announce its latest rate decision early Thursday morning.