Inflation Remains a Worry as Stocks Post Modest Gains

The major U.S. indexes moved modestly higher last week, with tech stocks outperforming other sectors. During the minutes released last Wednesday, the FOMC predicted that economic activity would continue to expand at a moderate pace and stated that labor market conditions remain strong. The central bankers were also optimistic about achieving their 2% inflation target and that gradual increases in the federal funds rate would be necessary – although these sentiments have sparked concerns among investors.

International markets were mixed over the past week. Japan’s Nikkei 225 fell 0.74%; Germany’s DAX 30 rose 0.26%; and Britain’s FTSE 100 fell 0.71%. In Europe, the IHS Markit Eurozone PMI fell from 58.8 in January to 57.5 in February, but growth remains solid in the region. In Asia, China proposed scrapping the presidential term limit, which would clear the way for Xi Jinping to stay in power at a time when the country’s growth is slowing.

The SPDR S&P 500 ETF  rose 0.59% over the past week. After briefly touching the 200-day moving average at around $253.00, the index rebounded to the 50-day moving average at $272.47. Traders should watch for a breakout to the pivot point at $278.64 or a breakdown to retest S2 support at $259.41. Looking at technical indicators, the relative strength index (RSI) rose to neutral levels of 54.22, while the moving average convergence divergence (MACD) could see a near-term bullish crossover following its bearish crossover in late January in a sign that things could be turning around. (See also: Selling Stocks on Rally Is New Mantra Amid Market’s Swings.)

Although the FOMC minutes raised inflation concerns, the major U.S. indexes ticked higher last week. …read more

Read more here: Inflation Remains a Worry as Stocks Post Modest Gains

Category: SPY, DIA, QQQ, IWM

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