It was a turbulent week for the S&P 500, but it held above that key 5000 level as it closed Friday at 5005. On Monday the markets were flat in anticipation of the inflation numbers before Tuesdays open. At 0830 the next morning the report showed that Januarys monthly consumer prices rose by 0.3%, up from 0.2% in December and surpassing market expectations of 0.2%. Like a gut punch, the S&P 500 gapped down at the open and got whipsawed throughout the day before closing down more than one percent. Over the next two days, the S&P 500 fought back to get above the 5000 level by Wednesdays close and then continued its rebound on Thursday to close at yet another record high. However, Fridays Producer Price Index (PPI) increased by 0.3%, higher than the anticipated gain of 0.1%. As a result, the 10-year Treasury yield jumped above 4.3%, the 2-year Treasury yield topped 4.7%, the highest since December, and in sympathy, mortgage rates also increased to their highest level in two months. While giving it its best shot, the S&P 500 did close near session lows, breaking a five-week winning streak. While we did break that steak, lets also look at this from a technical perspective. One characteristic of a bullish trend is to see a pattern of higher highs and higher lows. So lets see how this applies to the S&P 500 on a weekly basis. Last week the S&P 500s high was 5030, this week it was 5048 (higher highs). Last week the S&P 500s low was 4918, this week it was 4920 (higher lows). While we did break that streak of six straight up weeks, the streak of higher highs and higher lows remains intact at six. Next week the only major economic news is the release of the Fed Meeting minutes on Wednesday. However, what will probably drive the markets more comes after Wednesdays close when Nvidias (NVDA) reports their earnings. NVDA shares have jumped 27% in the last month, 47% in the previous three months, and 230% in the last year. A good report could be very bullish for the markets as NVDA ranks as the fifth largest market cap stock in the S&P 500 and is now valued more than the S&P 500's entire energy sector, which includes Exxon Mobil (XOM) and Chevron (CVX). By the way, NVDA has both six straight up weeks and six straight higher high/higher low weeks. For TSP TIPS, the three equity funds (C, S, I) all made new 52 week highs on Thursday and the C and I funds also made new all-time highs that day. As such, we recommend no changes to our current investment mix. Lastly, it will be a short next week as the markets are closed Monday for Presidents Day.
It was a turbulent week for the S&P 500, but it held above that key 5000 level as it closed Friday at 5005. On Monday the markets were flat in anticipation of the inflation numbers before Tuesdays open. At 0830 the next morning the report showed that Januarys monthly consumer prices rose by 0.3%, up from 0.2% in December and surpassing market expectations of 0.2%. Like a gut punch, the S&P 500 gapped down at the open and got whipsawed throughout the day before closing down more than one percent. Over the next two days, the S&P 500 fought back to get above the 5000 level by Wednesdays close and then continued its rebound on Thursday to close at yet another record high. However, Fridays Producer Price Index (PPI) increased by 0.3%, higher than the anticipated gain of 0.1%. As a result, the 10-year Treasury yield jumped above 4.3%, the 2-year Treasury yield topped 4.7%, the highest since December, and in sympathy, mortgage rates also increased to their highest level in two months. While giving it its best shot, the S&P 500 did close near session lows, breaking a five-week winning streak. While we did break that steak, lets also look at this from a technical perspective. One characteristic of a bullish trend is to see a pattern of higher highs and higher lows. So lets see how this applies to the S&P 500 on a weekly basis. Last week the S&P 500s high was 5030, this week it was 5048 (higher highs). Last week the S&P 500s low was 4918, this week it was 4920 (higher lows). While we did break that streak of six straight up weeks, the streak of higher highs and higher lows remains intact at six. Next week the only major economic news is the release of the Fed Meeting minutes on Wednesday. However, what will probably drive the markets more comes after Wednesdays close when Nvidias (NVDA) reports their earnings. NVDA shares have jumped 27% in the last month, 47% in the previous three months, and 230% in the last year. A good report could be very bullish for the markets as NVDA ranks as the fifth largest market cap stock in the S&P 500 and is now valued more than the S&P 500's entire energy sector, which includes Exxon Mobil (XOM) and Chevron (CVX). By the way, NVDA has both six straight up weeks and six straight higher high/higher low weeks. For TSP TIPS, the three equity funds (C, S, I) all made new 52 week highs on Thursday and the C and I funds also made new all-time highs that day. As such, we recommend no changes to our current investment mix. Lastly, it will be a short next week as the markets are closed Monday for Presidents Day.