Nasdaq, S&P 500 in the red as investors digest slower GDP and steady inflation

Economic Overview - The U.S. economy is showing signs of a slowdown, with the Bureau of Economic Analysis revising Q4 GDP growth down to 0.7% from 1.4%, a significant drop from the 4.4% growth in Q3 2025 [6] - Inflation remains stable, with the January Personal Consumption Expenditures (PCE) index indicating a month-over-month price increase of 0.3%, suggesting that inflation measures are under control [7] Federal Reserve Insights - The upcoming FOMC meeting is anticipated to be critical as rising stagflation risks challenge the Federal Reserve's dual mandate [2] - Analysts from Wells Fargo predict that the Federal Reserve will maintain steady rates, with the updated Summary of Economic Projections likely reflecting expectations of slightly higher inflation and lower growth, resulting in an unchanged policy path [3] - Chief Economist Jeffrey Roach from LPL Financial emphasizes that consistent monthly inflation prints in the range of 0.1% to 0.2% are necessary for investors to feel confident that inflation risks are contained [4] Market Reactions - U.S. markets began Friday positively, with the Dow Jones Industrial Average increasing by 166 points (0.4%), and both the S&P 500 and Nasdaq also rising by 0.4%, while the Russell 2000 saw a 0.9% gain [5] - Crude oil prices have decreased, with West Texas Intermediate falling 2% below $94 per barrel and Brent dipping just under $100, indicating softer energy prices [8] - Job openings in January reached 6.94 million, surpassing expectations, although the pace of quits and layoffs remained subdued, contributing to cautious optimism among traders [8]