Recap/Preview
The week that was:
Stocks Grinding Higher—Nasdaq Leads the Charge
The major U.S. indexes kept crawling toward record territory, with the Nasdaq Composite sprinting 2.58% on the week. Growth names had a nice little run, wiping the floor with value for the second time this year (as per the Russell indexes). Small-caps? They basically underperformed, with the Russell 2000 trailing the S&P 500 by 146 basis points—nothing to write home about. By Friday, both the S&P 500 and the Nasdaq were within 1% of their all-time highs.
Tariff Drama: Trump Throws a Curveball
Thursday lit a fire under the market when President Trump decided not to unleash fresh global tariffs. Instead, he signed some half-baked order that could lead to new “reciprocal” tariffs by April 1 on a country-by-country basis—classic “hurry up and wait” move. Traders took it as a positive because it pushes off any real tariff pain and keeps the door open for more negotiations.
Inflation’s a Pain in the… Wallet
Wednesday’s CPI numbers came in hot, rattling bond yields and feeding the “higher rates for longer” narrative. Headline CPI jumped 0.5% month over month and 3.0% year over year—yes, that’s faster than last time. Shelter costs alone ate up nearly 30% of that monthly increase, which is a big chunk. Core CPI (stripping out food and energy) also ran a bit hotter at 0.4%, up from 0.2% in December.
Thursday brought the PPI data, and it rose more than expected, too—up 0.4%. Some pockets (like health care and airfares) showed signs of cooling off, which took a bit of the sting out of the CPI numbers. But overall, inflation’s still being a stubborn pain.
Fed’s Not Ready to Play Nice
Fed Chair Powell was busy telling the Senate Banking Committee that while the Fed’s made progress beating down inflation, they’re “not quite there yet” and want to keep policy tight. Chicago Fed boss Goolsbee called the inflation reports “sobering” and said if we see more repeats, “the job is clearly not done.” Translation: Don’t expect that rate cut anytime soon. In fact, after the CPI print, traders pushed out their rate-cut bets from September to December.
Bonds: Choppy Action, Yields Still Elevated
Treasury yields whipsawed—jumped after the inflation hits, with the 10-year yield hitting an intraday peak of 4.66% on Wednesday, then pulled back later in the week. Muni bonds got slapped around right after CPI but bounced a bit on Thursday.
Investment-grade corporates outperformed Treasuries. New issuance was light, and demand was decent—though only two deals were oversubscribed. Traders are still picking up paper in the secondary market, drawn by higher yields and lean supply. High yield also hung in there, buoyed by the stock market’s rally and the general bond-market volatility.
Scoreboard (Friday Close | Weekly Change | YTD)
DJIA: 44,546.08 | +242.68 | +4.71%
S&P 500: 6,114.63 | +88.64 | +3.96%
Nasdaq Composite: 20,026.77 | +503.37 | +3.71%
S&P MidCap 400: 3,198.61 | -7.99 | +2.49%
Russell 2000: 2,279.98 | +0.27 | +2.23%
In short: Stocks are inching to records again, tariffs got kicked down the road, inflation’s still a thorn, and the Fed’s not blinking yet. Strap in—this ride isn’t over.
The Week Ahead (Feb 17 – Feb 21):
Monday (Feb 17): Fed Parade Begins
9:30am: FOMC’s Harker kicks things off, followed by Bowman at 10:20am, then Waller at 6:00pm.
Expect the usual Fed-speak about “tightening policy” or “data dependence.” If any of them drops a bombshell on rates or inflation, be ready for some intraday volatility, but don’t hold your breath—these events usually just set the tone.
Tuesday (Feb 18): Manufacturing & Housing Gauges + Trump Watch
8:30am: Empire State Manufacturing (forecast -1.1). Recent prints have been weak, so if this dips further, the market might get spooked.
