Wall Street Closely Watching if Stagflation Fears Will Continue [Weekly NY Stock Market Outlook]

Stagflation Fears Spread Last Week

Dow Jones Records Largest Drop Since January 2023

NY Stock Market Likely to be Driven by PCE Announcement This Week

This week (24-28), the New York stock market is closely monitoring whether last week's stagflation fears will continue. In particular, the market is expected to be influenced by the Federal Reserve's Personal Consumption Expenditures (PCE) price index, released on the 28th (local time). The PCE is a price indicator that the Fed considers more important than the Consumer Price Index (CPI).

On the last trading day of last week, the 21st, the New York stock market fell amid investor concerns about economic slowdown and persistent inflation. The Dow Jones Industrial Average closed at 43,428.02, down 748.63 points (-1.69%) from the previous session. This marks the largest decline this year. Economic indicators released that day raised concerns about economic slowdown. According to S&P Global, the U.S. Services Purchasing Managers' Index (PMI) for February was 49.7, contracting for the first time in 25 months since January 2023. The January CPI recorded a 3.0% increase, fueling concerns about inflation reignition. This is why stagflation fears are emerging, where prices rise despite economic recession.

On the first trading day, the 24th, the Dallas Fed's February manufacturing index will be released. The following day, the 25th, will see the December S&P Case-Shiller Home Price Index and the Conference Board's (CB) February Consumer Confidence Index. On the 26th, January new home sales data will be announced.

On the 27th, scheduled releases include weekly initial jobless claims, January U.S. durable goods orders, and Q4 U.S. GDP growth rate (preliminary). The 28th will feature the PCE, January U.S. goods trade balance (advance), and February Chicago PMI.

This week also includes speeches from key Fed officials. Starting with Dallas Fed President Lori Logan, Fed Vice Chair Michael Barr, and Richmond Fed President Thomas Barkin on the 25th, followed by Atlanta Fed President Raphael Bostic on the 26th, Vice Chair Barr, Fed Governor Michelle Bowman, Cleveland Fed President Beth Hammack, Philadelphia Fed President Patrick Harker on the 27th, and Presidents Goolsbee and Barkin on the 28th.

Nvidia's Q4 earnings report after market close on the 26th is also noteworthy. This is the first earnings release since Chinese AI startup Deep Seek shook the market. Nvidia's revenue for fiscal year 2025 Q4 (November 2024-January 2025) is estimated to reach $38 billion.

From New York=Special Correspondent Shin-young Park nyusos@hankyung.com