S&P 500 ETF Drops 0.8% After 0.5% PPI Surprise, Holds Support
SPDR S&P 500 ETF opened 0.8% lower for a weekly loss after January PPI rose 0.5% month-over-month and core PPI jumped 0.8%, squeezing rate-cut expectations. Technically, SPY holds support at the February 2 low with TRIN signaling pullbacks capped near 5% and resistance around 696.
1. Inflation Surprise Sends SPY Lower
January’s Producer Price Index rose 0.5% month-over-month and core PPI jumped 0.8%, the strongest since July 2025, triggering a 0.8% drop in SPY at the open and setting it on course for a weekly decline.
2. Rate-Cut Timeline Under Pressure
Higher-than-expected PPI readings have pushed back market expectations for Federal Reserve rate cuts, with investors now looking to the second half of the year for potential easing.
3. Technical Structure Remains Intact
SPY maintains support at the February 2 weekly low, while the TRIN indicator at 100-day and 50-day levels suggests pullbacks should be limited to around 5%, with the next upside barrier near 696.