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NEWS
Bulls Get A PCE Of The Action

After several weak sessions, U.S. stocks finally caught a bid, but sentiment remains bearish territory as investors fear tariffs and other weekend surprises. With many leading stocks down several days and a better-than-expected inflation print coming together, the market is setting the stage for a potential comeback next week. 👀 

Today's issue covers January’s cooling inflation rate, Terawulf’s turnaround, a specialty insurance provider popping, and more from the day. 📰

Here’s the S&P 500 heatmap. 11 of 11 sectors closed green, with financials (+2.05%) leading and real estate (+0.70%) lagging.

And here are the closing prices: 

ECONOMY
Fed’s Key Inflation Measure Cools 🌡️ 

The Federal Reserve’s preferred inflation metric, the core PCE price index, fell to a seven-month low during January, helping ease concerns from other inflation metrics that prices could accelerate to the upside again.

Healthcare services costs drove the growth slowdown, falling 0.13% MoM and rising just 1.8% YoY. This metric has a 19% weighting in core PCE, so changes in it make big waves in the overall metric. 🔻 

Still, this does little to change the market’s overall rate cut hopes. Instead, investors view this as slightly reducing the risk of a sharp upside surprise in inflation.

However, consumer spending flipped sharply negative during January despite personal income rising much faster than expected (+0.9% vs. 0.3% estimated). Government benefits like Social Security, higher compensation, and higher dividend income drove the increase. 💸 

Consumer spending slipped 0.2% in January after rising 0.8% in December, driven by a 1.2% decline in goods spending. Colder-than-anticipated weather across the country and overall macro uncertainty weighing on consumer sentiment are the likely culprits. However, investors still watch these numbers closely due to their large weighting in the GDP calculation.

Despite today’s bounce in stock prices, Stocktwits sentiment remains in ‘bearish’ territory. Geopolitical concerns, particularly around the U.S.’s approach to the Russia vs. Ukraine war, remain at the top of investors’ minds. And with tariffs and other news bringing downside surprises lately, many are taking a cautious approach to risk. 🛡️ 

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