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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.

The most recent trading week was another consequential one. In the United States, perhaps the most important news announcement was the release of the most recent FOMC meeting minutes.

The minutes came out on Wednesday and caused some market volatility. One of the key takeaways was that Trump’s tariff proposals were weighing on the Fed and would likely have an impact on both markets and financial policy. Many who have studied the issue say that tariffs will likely increase prices, but there has been some pushback on this narrative from those who say that tariffs didn’t lead to inflation in 2016.

Ultimately, the Fed is likely to keep interest rates where they are for the next several months. It’s possible that they will remain where they are for the rest of 2025 depending on the results of future inflation and other important data releases.

On Thursday, unemployment claims data was made public. Over the last seven days, there were 219,000 requests for benefits, which was slightly more than the projected 215,000 requests. Friday saw the release of the Flash Manufacturing and Services PMI reports. Manufacturing came in at 51.6 percent while the services PMI came in at 49.7 percent.

This indicates that the manufacturing sector is expanding while the services sector is beginning to slow. Although this could be just a blip in the data, it could be an indication that prices may start to come down across the board. Over the past few years, high demand for services has kept inflation high and resulting in stubborn price increases.

Also on Friday, the University of Michigan released its revised consumer sentiment and inflation expectations. Consumer sentiment went down to 64.7 percent compared to the initial reading of 67.8 percent. Inflation is expected to be 4.3 percent a year from now, which was unchanged from the original report released earlier in February. Finally, existing home sales data came out, and during the past month, there were 4.08 million sales.

The S&P 500 fell 104.52 points to close the week at 6,013, which was a loss of 1.71 percent over the last five trading days. On Wednesday afternoon, the market hit its high of the week of 6,146 before quickly reversing. On Friday afternoon, the index fell to 6,012 before reversing to close out the session.

The Dow fell by 1,266 points over the last five trading days to close at 43,428. On Wednesday afternoon, the market hit its high of 44,625 before reversing and losing ground through the close on Friday. The Dow lost 2.84 percent and is now down .63 percent for the month.

Finally, the Nasdaq fell by 428 points this week to finish at 19,524, which was a 2.15 percent drop over the past five trading days. As with the other two major indexes, the Nasdaq made its high of the week on Wednesday and its low of the week on Friday. On Wednesday morning, the market briefly exceeded 20,000 before reversing and finishing near the weekly low of 19,518.

In international news, the Royal Bank of Australia (RBA) dropped the country’s interest rate to 4.1 percent from 4.35. The move was seen as a sure thing ahead of time and resulted in a relatively muted market response. Laster in the week, the country announced that the economy had gained 44,000 jobs and that the unemployment rate ticked up to 4.1 percent.

On Tuesday evening, the Bank of Canada (BOC) announced that the country’s inflation rate stood at 2.7 percent on an annual basis. Later that week, Canada announced that its retail sales were up 2.5 percent over the past month, which was much higher than the anticipated 1.5 percent. On Wednesday, Great Britain announced that its inflation rate had increased to 3 percent on an annualized basis.

This week, preliminary GDP data for the previous quarter will be made public while the PCE Price Index for January will be available on Friday morning.

The previous trading week was full of important news that will impact monetary policy as well as market policy for the next several months. On Wednesday, inflation data for the month was released and found that it rose by .4 percent over the past month. On an annualized basis, inflation came in at 3 percent, which was slightly higher than the expected 2.9 percent.

However, some were quick to point out that the uptick in inflation could be seasonal and nothing to panic about. Regardless, the initial reaction from the market was that interest rates would likely stay where they were until at least June. Of course, nothing is guaranteed as the new administration is pushing Fed Chair Jerome Powell to reduce rates regardless of market conditions.

On Thursday, the Price Producers Index (PPI) was released and it revealed that prices rose by .4 percent in the past month. When food and energy prices were removed from the calculation, prices only rose by .3 percent over the past month. Also on Thursday, unemployment claims data was made public, and over the past seven days, 213,000 people requested benefits compared to an expected 217,000.

Friday, retail sales data was released, coming in below market expectations. Overall, sales dropped by .9 percent in January compared to an expected drop of .2 percent. For some, this put the prospect of rate cuts back on the table as falling sales numbers could be signs of weakness elsewhere in the economy. Others said that the drop was caused by the wildfires and unusually cold weather throughout the country.

In other important news, Fed Chair Powell testified in front of members of the House on Tuesday and Wednesday. Although his testimony created some momentary market volatility, most observers believe he didn’t say anything too out of the ordinary. His key message was that the Fed would cut rates if necessary but that there was no rush to act right now.

The S&P 500 had another positive week finishing up 1.14 percent to close at 6,114 on Friday. The market made its low of the week Wednesday morning when it dipped to 6,017 before reversing. It made its high of the week of 6,124 on Friday morning before giving up some ground going into the day’s close.

Like the S&P, the Dow was also positive for the week finishing up .47 percent. This represented a gain of 187 points for the index that closed at 44,546 at the end of trading on Friday. Also like the S&P, the Dow made its low of the week before reversing and closing the week near the high of the last five trading days. The weekly range was 44,133 at the low end while 44,753 was the high.

Finally, the Nasdaq was up 1.75 percent this week to close at 20,026. This was a gain of 344 points for a market that is up over 1,100 points for the month of February. Over the past five trading days, the index made a low of 19,423 on Wednesday and closed at its high of the week.

In international news, New Zealand announced that it expects inflation to drop slightly to 2.06 percent in the next quarter. Great Britain revealed that monthly and quarterly projected gross domestic product (GDP) figures beat expectations. For the month, the GDP grew by .4 percent compared to .1 percent while the quarterly figure is believed to be .1 percent compared to a drop of .1 percent. Finally, Switzerland announced Thursday morning that inflation was down by .1 percent on a monthly basis.

The upcoming week will likely be another significant one although it will likely start on a muted note as the President’s Day holiday is Monday. However, the FOMC meeting minutes will be released Wednesday while the Flash Manufacturing and Flash Services PMI reports are released on Friday. Unemployment claims data will be made public on Thursday.