PCE data will be the headline economic release this week, offering the clearest inflation snapshot for the Federal Reserve's policy outlook. Analysts expect the core PCE index to show 0.3% month-on-month growth in December, slightly above November's 0.2%, with year-on-year inflation at 3.0% versus 2.8%. This follows cooler January CPI readings and a strong jobs report, fueling speculation the Fed might start cutting rates as early as June. GDP estimates point to a slowdown, with Q4 growth projected at 2.8% quarter-on-quarter, down from 4.4% in Q3.

Consumer spending remains the key driver, though the economy shows a "K" shape, with low-income households and small businesses struggling despite robust overall growth. Fed minutes from January's meeting, released Wednesday, will reveal policymakers' stance on holding rates steady at 3.5%-3.75% and their cautious outlook, especially given two governors dissented. Walmart's earnings on Thursday are critical, providing a consumer spending barometer ahead of retailers like Target and Home Depot. Meanwhile, Palo Alto Networks' deal for $3.35 billion acquisition of Chronosphere highlights AI-driven growth in cybersecurity, with its integration expected to bolster AI capabilities in threat detection.