Weekly Market Recap March 1

An Unforgettable Event Elevating Trading Education 

Wall Street saw a record-breaking day as investors breathed a sigh of relief after the Federal Reserve’s preferred inflation gauge met expectations. The Personal Consumption Expenditures (PCE) index held steady, easing concerns about a further rise in prices and fueling hopes for an earlier-than-expected rate cut by the Fed.

The S&P 500 notched its 14th record close of the year, capping off a four-month winning streak. The positive data also lifted the Nasdaq 100, with megacap stocks like Nvidia leading the gains. Bitcoin prices remained stable near $62,000. Analysts saw the PCE report as a sign that inflation is not spiralling out of control. “This data should restore confidence that the Fed will begin cutting rates in 2024,” said Quincy Krosby of LPL Financial. The wait-and-see approach from the Fed, validated by the PCE data, has been welcomed by investors, who are now betting on a potential June rate cut.

Treasury yields dipped slightly, reflecting the market’s reduced inflation worries. This trend was further bolstered by data indicating a softening labour market and expectations of renewed bond-buying by the Fed.
While the immediate concerns about inflation seem to have subsided, some analysts caution against complete complacency. Michael Shaoul of Marketfield Asset Management points out that certain aspects of the PCE data, like the rise in service-related costs, remain concerning.

Overall, the PCE report has instilled optimism in the market, with investors anticipating a potential shift in Fed policy towards lower interest rates. However, the longer-term inflation picture remains uncertain, and market participants will closely monitor upcoming data releases for further clarity.

Indexes such as the S&P 500 have closed a 4th consecutive month of gains, trading in a bullish channel and maintaining a “wave” pattern of resistances every 100 points. Since last Friday, the 5,100 level has kept limiting the index from reaching higher highs, upholding the S&P in a sideways movement. If the resistance were broken, the next ceiling would be at 5,200. On the other hand, the 5,000 level is the closest support, now below the bullish channel’s lower boundary.

The most popular crypto has been involved in a significant rally as investors pour into crypto ETFs and prepare for the upcoming halving. These supply and demand dynamics have caused the price to top $60,000 and reach the resistance of $63,562.4, lastly traded in November 2021. The Bollinger Bands show a significant increase in volatility, and the Parabolic SAR indicator keeps signalling a bullish momentum for Bitcoin. However, the rally is getting exhausted, and a pullback could happen anytime soon.