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Market Heat Check: Sticky Inflation and the Friday Flush · The SPY Trader

• 0:00
  Good morning , early birds and market mavens !
• 0:03
  It is exactly five o'clock in the morning on this fine Saturday , February 28th , 2026 , here in the Pacific time zone .
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  I am your host , Penny Pincher , and you are listening to Spy Trader , your goto guide for navigating the financial seas .
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  We have reached the end of a wild week , and if you are looking at your portfolio this morning , you might be seeing a bit of red .
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  We just closed out the final week of February , and it was a bit of a roller coaster , to say the least .
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  The U.S.
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  stock market faced what we analysts call a Friday Flush .
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  This was a sharp reaction to the Personal Consumption Expenditures , or PCE , price index released back on February 26th .
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  Our favorite benchmark , the SPDR S&P 500 ETF Trust , also known as the SPY , finished the week down zero point eight percent .
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  It seems investors were eager to lock in profits after that recordbreaking start we had earlier in the month .
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  The techheavy Invesco QQQ Trust took an even bigger hit , dropping one point four percent as rising yields put pressure on those highgrowth valuations .
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  Even the broader Vanguard Total Stock Market ETF , or VTI , felt the sting , though it was slightly more resilient , ending down only zero point six percent thanks to some help from midcap value stocks .
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  The big story this week was the January PCE data .
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  Inflation seems to be a bit stickier than we hoped , especially in the services sector .
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  Core PCE rose zero point three percent monthovermonth , which was higher than the forecast .
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  This news sent the yield on the 10Year Treasury surging to four point twentyfive percent .
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  Consequently , the iShares 20 plus Year Treasury Bond ETF , the TLT , took a tumble of two point one percent .
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  The market sentiment has shifted dramatically .
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  People went from expecting rate cuts in March to now saying maybe June .
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  That uncertainty is the primary headwind we are facing right now .
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  Looking at the sectors , the Technology Select Sector SPDR Fund , or XLK , saw a pullback after its recent peak .
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  Giants like NVIDIA and Microsoft reported stellar earnings earlier this month , but investor expectations have become so high that even beating those numbers led to selling .
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  On the flip side , Financials were the week's big winners .
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  The Financial Select Sector SPDR Fund , XLF , benefited from a steepening yield curve .
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  JPMorgan Chase actually hit a 52week high because their net interest margins are holding steady despite the Fed’s pause .
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  In healthcare , the XLV fund showed its defensive strength .
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  As growth slowed , investors ran toward the stability of Eli Lilly and UnitedHealth Group , which are seen as allweather holdings .
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  We also saw some interesting companyspecific moves .
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  Apple made headlines on February 25th with their Vision Pro 2 advancements and new AI integration for the upcoming iPhone 18 .
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  While exciting , the stock stayed flat because of the general market mood .
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  Walmart showed us that the American consumer is starting to trade down to value brands , which is a bullish sign for bigbox retail but a warning for luxury goods .
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  And poor Tesla faced a four percent dip after a regulatory probe into their newest Full SelfDriving version 13 .
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  So , what should you do with your money ?
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  Here are my recommendations for this Saturday morning .
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  First , consider moving toward core diversification with a value tilt .
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  I like the Vanguard Total Stock Market ETF , VTI , here .
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  It gets you exposure to those midcap companies that are catching up to the megacap tech leaders .
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  Second , if you are worried about that sticky inflation , look at the Vanguard Real Estate ETF , VNQ .
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  Real estate investment trusts like Prologis or American Tower offer great dividends and act as a natural hedge .
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  Third , do not give up on tech , but be strategic .
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  Use the Technology Select Sector SPDR Fund , XLK , to pivot toward applied AI companies like Salesforce or Adobe , which are actually monetizing their software now .
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  Finally , for some defensive income , you cannot go wrong with the Health Care Select Sector SPDR Fund , XLV .
• 4:34
  Companies like Johnson and Johnson provide a bedrock for your portfolio during these volatile midterm election years .
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  Overall , my outlook for the start of March 2026 is one of patience .
• 4:46
  The market is just digesting a massive year .
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  Stay diversified , keep an eye on those banks in the XLF , and maybe add a little gold for safety .
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  I will be back in a few hours with more updates .
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  Until then , I am Penny Pincher , reminding you to trade smart and stay friendly !