SPX: another not-happy Friday

Markets have been playing a bit of a ping-pong game since the start of the year. Uncertainty is never a good world for financial markets, so it was this Friday. In the same week, the S&P 500 reached a fresh, new all time highest level at 6.148 and a significant pull-back on Friday. One of the extremely spooky works since recently are tariffs, which a new US Administration is using too frequently, for the taste of investors. The S&P 500 lost 1,71% at Friday's trading session, while other US indices were also somewhere in this range. The University of Michigan Consumer Sentiment was published during the week, showing not some happy figures about current consumer sentiment. In addition, consumers are expecting further increase in inflation, higher from previous releases. The 5 years inflation expectations currently stands at 3,5%, for which analysts are noting, is the highest level since 1995.

The highest contributors to index drop on Friday were tech companies, which are currently ones which hold the highest participation. Other sectors were also affected, however, those related to major supplies were the ones that gained during the week. The consumer sector, healthcare and utilities were the ones that investors bought the most. It was sort of a move toward basics. As analysts are noting, the defensive sectors are the ones which gain during times of fears on future economic growth.

The week ahead will be a sensitive one for financial markets, as PCE data are scheduled for a release. The start of the week might bring some relaxation from Friday's negative sentiment, however, it will not be a sign that the positive sentiment is back, but only a sort of short term positioning for PCE data. Depending on final PCE data, a higher move could be expected toward either side. The higher market sensitivity will continue as long as uncertainties are existing either through trade tariffs, or through inflation data.