Another eventful week to look forward to

The news on Friday that consumer price inflation was lower than market expectations added to hopes that the Federal Reserve will have greater room to cut interest rates in the coming months, and will cut interest rates at least twice this year, driving Treasury yields to their lowest levels of the year. The S&P 500 fell just over 1% for the week, and the Nasdaq just over 2%, but that told only half the story. Over the past eight sessions, 115 stocks in the S&P 500 have declined 7% or more in a single day. Times like these require cool heads and warm hearts; emotionally driven decisions can be costly. These kinds of events have been a bit of a red flag for the broader index in the past. The current results season has provided opportunities for active traders. The FTSE 100 continues to do well, finishing the week in the blue despite some weakness in the banking sector, as commodity stocks continue to support the index.

Looking to the week ahead, in the US, markets will be closed on Monday in observance of Presidents’ Day. The US earnings season may be more than halfway through, but this week we can expect results from well-known names, including Walmart, Warner Bros. Discovery, Booking Holdings, Deere & Company, and Palo Alto Networks. We receive the advanced estimate of fourth-quarter US economic growth, which is forecast to slow from the 3rd quarter, partly due to the Government shutdown. We also receive the minutes of the last Fed meeting, which may provide clues about where voting members stood on supporting another interest rate cut. This week, we get the Fed’s preferred measure of inflation, the Personal and Consumption Expenditure Index. There is a selection of other macro reports, including Durable Goods, jobless claims, flash PMIs, and the list goes on.

It is also a busy week for the UK as we get a round of UK inflation and labour market data. Labour market, inflation and retail sales figures may add fresh colour to the likely next move by the Bank of England post its recent narrow decision to keep interest rates unchanged. Headline inflation is expected to ease to around 3%, with core inflation slowing to approximately 3.1%. The unemployment rate is projected to remain steady at 5.1%. We also get the flash PMIs for Europe and the UK.

A positive earnings season should have provided investors with greater confidence in the months ahead, but some of the aggressive moves over the past few weeks have shaken confidence somewhat. The S&P Global IMI Risk Appetite Index fell sharply to +13% from a 13-month high of +41% in January. There was also a modest decrease in the February 2026 Merrill Lynch Fund manager Bull Bear sentiment survey. Retail investors’ confidence has also been shaken as pessimism among individual investors about the short-term outlook for stocks increased in the latest AAII Sentiment Survey.

For choice markets look like opening the day on a positive note