Economic data showing mild inflation amid rising employee compensation, along with reassuring testimony before Congress by the new Federal Reserve chair, was overshadowed by stock market volatility this past week. While worries about a trade war dominated headlines, newly released data showed that inflation in January did not shoot higher as many had feared, and healthy growth in wage gains was reported.

Personal disposable income soared in January. The effects of the federal income tax cut are starting to coarse through the economy, and that means rising spending is in the pipeline. That boosts economic growth, which leads to higher corporate earnings.

Significantly, the inflation indicator watched closely by the Fed - the personal consumption expenditure deflator - remained unchanged in January from December 2017, at 1.7%.