S&P 500 Rises as News Headlines Miss the Week's Biggest Story

The market-moving headlines in the week that was were pretty bad for Wall Street bulls. A higher than expected consumer inflation report on Wednesday, 12 February 2025 would all but seem to have diminished the chances of even one rate cut during 2025. At least, that’s the news the market-moving headlines proclaimed.

But by the end of the trading week, investor expectations for the outlook for interest rate cuts in 2025 changed to go in a different direction. The CME Group’s FedWatch Tool closed out the week anticipating a quarter point rate cut to be announced after the Fed meets on 7 May (2025-Q2), about 12 weeks earlier than it forecast a week earlier. While that remains the only rate change expected in 2025, the FedWatch tool suggests another quarter point rate cut is likely in January 2026, which could move up into 2025-Q4 if the momentum for the change in expectations continues.

That change coincided with investors shifting their attention once again to 2025-Q4, which coincides with a 1.5% increase in the level of the S&P 500 over the previous week. The index reached 6,114.63 on Friday, 14 February 2025, just several points shy of its all-time record high of 6,118.71 from 23 January 2025. The latest update of the alternative futures chart tracks the trajectory of the S&P 500 changing with along with the changing investment horizon for investors.

Here are the week’s market moving headlines, in which the business news media missed the late breaking change in investor expectations for how the Federal Reserve will be setting the Federal Funds Rate in 2025 and beyond.

Monday, 10 February 2025

• Signs and portents for the U.S. economy:

• Trump raises tariffs on aluminum, steel imports in latest trade war salvo

• Where does the US get its steel and aluminum from?
• US copper price premium soars to record after Trump tariff moves
• US steel makers stocks rise, foreign peers fall on Trump tariff plans
• Looming tariffs turned into a mad dash north for one US manufacturer

Oil gains nearly 2% despite trade war concerns

Fed minions expected to sit on hands for months before next interest rate move:

• Fed to wait for months on next rate cut as tariffs risk inflation flare up: Reuters poll

Bigger trouble developing in China:

• China to roll back clean power subsidies after boom
• China’s consumer inflation at 5-month high, producer deflation persists

Nasdaq, S&P, and Dow ended in the green as investors await inflation data

• Gold bulls lock in on glittering milestone; $3,000/oz in sight

Tuesday, 11 February 2025

• Signs and portents for the U.S. economy:

• Oil prices climb to 2-week high on supply worries, US tariffs check gains

• EIA raises US oil production forecast for 2025

Fed minions say US economy is okie dokie and so are their monetary policies, so there’s no need to rush to cut interest rates faster:

• Fed’s Powell, quizzed about trade, Musk, and bank safety, says economy is fine

• Powell says there’s no rush to ease more given strong economy

Fed’s Williams says monetary policy is in right place to achieve Fed goals

Bigger trouble, stimulus developing in China:

• Shares of Chinese steelmakers slide as Trump’s fresh tariffs add uncertainty on exports
• China’s car sales post biggest drop in almost a year in January

Eurozone minions thinking about responding to US steel, aluminum tariffs:

• EU readies response as Trump hikes steel and aluminium tariffs

• Germany’s trade surplus with US reaches new record
• German exports rise, industrial production falls

Wall Street ends mixed on tariff drama, Fed comments; focus shifts to consumer inflation

• Wall Street ends mixed as Coca-Cola gains and Tesla drops

Wednesday, 12 February 2025

• Signs and portents for the U.S. economy:

• US consumer inflation increases at fastest pace in nearly 1-1/2 years in January

• Inflation heats up more than expected in January CPI
• Hotter January inflation jolts markets, dimming rate cut hopes
• Few mourn the US penny as Trump moves to kill it

Oil prices retreat after report of U.S. crude stockpile rise

US fourth-quarter 2024 earnings growth set to be highest in three years

Fed minions surprised by inflation, thinking about stalling more rate cuts:

• Fed’s Powell sees a ways to go on shrinking Fed holdings
• US inflation jump puts Fed officials on notice as Powell testifies

• Fed’s Bostic: Not comfortable cutting rates again until there is more clarity on inflation, other policies

Hot Jan US CPI surprise argues for Fed staying in neutral

BOJ minions say they’re going to aim at 2% inflation for Japan’s economy:

• BOJ to conduct monetary policy to achieve 2% inflation target, Governor Ueda says
• BOJ governor says higher food prices in Japan may alter inflation expectations

ECB minions say they’re excited to keep cutting Eurozone interest rates, have dark outlook for Eurozone economy:

• ECB can keep cutting rates even if Fed takes it slow, Vujcic says

• Reuters interview with ECB policymaker Vujcic

ECB’s Nagel wary of blurry ‘neutral’ rate target, U.S. tariff damage

ECB’s Villeroy reaffirms that Trump policies will likely be negative for economy

S&P 500 ends down as hot US inflation data hints at fewer rate cuts

• Dividend attention grows as Wall Street digests higher inflation report

Thursday, 13 February 2025

• Signs and portents for the U.S. economy:

• US producer inflation trends higher; labor market remains stable
• Trump outlines reciprocal tariff plan in latest bid to reshape trade on his terms

• Trump’s memo outlining reciprocal tariffs plans

US power companies increase data center demand spending as DeepSeek fears wane

Higher inflation pushing back timing of Fed minions’ expected 2025 rate cut:

• Fed seen likely policy hold until September; Traders add bets on July cut

BOJ minions expected to keep delivering interest rate hikes because of inflation in Japan:

• Japan’s wholesale inflation jumps, reinforcing BOJ rate-hike bets
• Most economists expect BOJ to hike rates in latter half of 2025, survey shows

Nasdaq, S&P close up 1% as Trump tariff directive staves off new immediate levies

• Wall Street ends higher after Trump unveils tariff plan
• Can the S&P 500 pull off a three-peat 20%+ year? Wells Fargo says, ‘In short, no’

Friday, 14 February 2025

• Signs and portents for the U.S. economy:

• Oil edges lower as potential Ukraine peace deal eases supply worries
• US retail sales post biggest drop in nearly two years amid winter freeze
• US manufacturing output falls in January on weak motor vehicle production

Fed minions to address criticism of how they measure inflation by becoming less clear about it; also say they want to go slower on rate cuts:

• Fed may only nuance much-maligned ‘averaging’ strategy
• Fed’s Logan calls for caution on rate cuts, even if inflation cools

Bigger trouble, stimulus developing in China:

• Chinese exporters brace for ‘rat race’ in shift away from US
• China January bank lending hits record high on policy stimulus
• China’s property loan contraction eases after government support

Dow, S&P, and Nasdaq closed mixed as markets snapped a two-week losing streak

The Atlanta Fed’s GDPNow tool‘s projection of what real GDP growth will be in the 2025-Q1 dropped from last week’s +2.9% to +2.3% on 14 February 2025.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull excited by good earnings news”. This is pretty generic cartoon for which we dropped in a headline to capture what the market-moving headlines missed!