U.S. Stocks Rebound 1.2% as Fed Comments Boost Market

Last week, the U.S. stock market experienced a rebound, driven by dovish comments from the Federal Reserve and statements from President Trump regarding flexibility on tariff plans. The Dow Jones Industrial Average rose by 1.2%, marking its largest weekly gain in over two months. The S&P 500 index increased by 0.51%, ending a four-week losing streak, while the Nasdaq Composite index saw a slight gain of 0.17%, halting its previous four-week decline. However, large-cap tech stocks generally closed the week lower, with notable declines in companies like Nvidia and Tesla.

The cryptocurrency market also showed signs of recovery, with Bitcoin experiencing significant fluctuations. After dipping below $81,000 on Tuesday, Bitcoin rebounded and surged above $87,000 on Thursday following dovish comments from the Federal Reserve. This surge marked a two-week high for Bitcoin, which then oscillated around the $84,000 level. By the end of the week, Bitcoin was trading at $85,721, up 3.18% from the previous week. Other major altcoins, such as Ethereum and BNB, also saw slight gains, with Ethereum striving to hold above $2,000 and BNB's on-chain meme trend continuing to attract attention.

In the commodities market, the U.S. dollar index rose by 0.34% for the week, marking its first weekly gain this month. Tensions in Russia-Ukraine and the Middle East continued to escalate, leading to a more than 2% increase in crude oil prices for two consecutive weeks. Spot gold also rose by 1.31% last week, extending a three-week uptrend.

The Federal Reserve kept interest rates unchanged last week, in line with market expectations, with guidance for two rate cuts still in place for the year. Powell's remarks brought some comfort to the market. This week, the focus is on Friday's release of the Fed's preferred inflation measure—the PCE Price Index. Additionally, as the April 2nd "tariff deadline" approaches, market caution persists due to uncertainty. However, once the tariff outlook becomes clearer, the ongoing market turbulence of recent weeks may begin to subside.

Investors are now shifting their focus to the upcoming release of the U.S. February Personal Consumption Expenditures (PCE) Price Index, a critical measure of inflation closely monitored by the Federal Reserve. The core PCE Price Index, which excludes volatile food and energy prices, is projected to rise to 2.70% year-on-year in February, up from the previous 2.60%. This increase reflects a continued upward trend in inflationary pressures, which has been a central concern for policymakers and investors alike.

The market's anticipation of the PCE data release is heightened by the recent economic projections from the Federal Reserve, which forecast core PCE inflation to reach 2.8% for the year, up from the previous forecast of 2.5%. This adjustment indicates a growing recognition of persistent inflationary trends, which could influence the Fed's decisions on interest rates and other monetary tools. The Cleveland Fed's Nowcast model estimates that the headline PCE price index moderated slightly from 2.5% to 2.4% year-on-year in February, suggesting a mixed picture of inflation dynamics.

Analysts' forecasts for the February PCE data vary, with some predicting a month-on-month increase of 0.29% and a year-on-year increase of 2.7% for the core PCE index. The headline PCE price index is expected to rise by 0.26% month-on-month and 2.45% year-on-year. These projections highlight the market's sensitivity to inflation data, as even small deviations from expectations can trigger significant market reactions. The upcoming PCE data release will provide crucial insights into the state of the U.S. economy and the trajectory of inflation, influencing investor sentiment and market movements in the coming weeks.