Stocks hit record highs as investors wait for Fed minutes, a manufacturing update What should you know this week

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The S&P 500 ( ^GSPC) increased to a record level this week, as the latest inflation data showed positive signs for the Federal Reserve’s rate-cutting plans.

The week ended with the Nasdaq Composite (gaining over 2.5 percentage points, and the S&P 500 increased just 1 percent. Its Dow Jones Industrial Average ( DJI) gained around 0.5 percent.

The coming week will see an ebb of economic news. Investors will be focusing on the minutes from the Federal Reserve’s Jan. meeting and reports on the state of the service and manufacturing industries and consumer mood.

The corporate earnings season is in full swing and is dominated by quarterly results by Alibaba ( BABA) and Walmart ( WMT). In total there are 46 S&P 500 firms are set to report their earnings on the eve of the holiday.

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This week, two new inflation figures for this month revealed that prices grew significantly more than Wall Street had expected. However, economists discovered positive news for the markets as well as for the Federal Reserve within the details.

The most important categories of important categories of the Consumer Price Index (CPI) and Producer Price Index (PPI) are fed into the Fed’s most popular inflation gauge, called the Consumer Consumption Expenditures (PCE) index. In analyzing these categories, it is apparent that price rises likely decreased in January.

Economic analysts now anticipate “core” PCE, which does not include the volatile categories of energy and food, to likely be 2.6 percent in January, a decrease from 2.8 percent recorded in December.

The market is now anticipating one or two interest rate reductions from the Fed in 2025. This is not much change from the week before, as per Bloomberg data. Additionally, many economists believe that the Fed is more likely to cut rates of interest rather than increase the rate.

“We think the bar for Fed hikes remains high,” Morgan Stanley chief US economist Michael Gapen wrote in a note to clients on Friday. “The evolution of inflation expectations and second-round effects from tariffs on services inflation remain key points of emphasis. But, for now, we still think the distribution of Fed policy outcomes skews in the direction of rate cuts as opposed to hikes.”

Investors will be looking at the minutes of the Federal Reserve’s meeting of January, scheduled for release on Wednesday, 2 p.m. ET, for clues about its outlook on the path ahead for interest rates.

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A stunning selection of stocks

It’s the S&P 500 is back near an all-time high, but this time,e it’s not just about a few tech-related stocks. Meta ( META) stock has indeed increased for 20 consecutive days, and its greater than 25% increase in the past year has helped the increase in the S&P 500. However, Meta, as well as Amazon ( AMZN,) are the only “Magnificent Seven” tech stocks that have outperformed the S&P 500 so far in 2025. In addition, the amount of companies that have outperformed the index’s gains of 4% has been soaring since the start of the year.

At the time of writing, ng as of Wednesday’s close, 48% of the S&P 500 is outperforming the index by 2025, which is roughly in line with the 25-year median and higher than the 29% recorded in the last. According to Richard Bernstein Advisors CEO Richard Bernstein noted in Trading User Platform Finance’s most recent Chartbook, The last two years were the lowest percentage of stocks that outperformed the index in the past 25 years.

The quantity of stocks that are participating in the current market rally shows the strength of the bull market. However, it doesn’t suggest that the benchmark index itself will rise, Freedom Capital Markets chief strategist Jay Woods said.

“If we get a bad report out of Nvidia in a few weeks [on Feb. 26], then we could see the market turn lower,” Woods stated to Trading User Platform Finance. “But we’ll still see rotation, just not into the names that are making headlines.”

AI trade takes place.

Although many members of the Magnificent Seven aren’t market leaders, AI euphoria appears alive and well in the markets. AI software firm Palantir ( PLTR) is the best performer within the S&P 500 in 2025, increasing by over 55%, then followed by Super Micro Computer ( SMCI), which is also increasing by more than 50%.

Other aggressive moves in AI companies on Friday echoed the theme of this week as investors swiftly removed some stocks and took positions in other companies after Nvidia announced its most recent equity positions. The AI chip giant has cut its stakes on Serve Robotics ( SERV) and SoundHound ( SOUN). Both shares fell in price in the wake of the announcement.

The shares in WeRide ( WRD), which is a Chinese autonomous driving company, Its stock was almost doubled.

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