 | AUTHOR: Jason Roque, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, fuel, FRB, UAW |
Markets moved lower even as inflationary data was encouraging. What does this mean in the short-term?
Monday S&P 500 0.67% | NASDAQ 0.81%
Markets rose to open the week as investors were bullish on inflation data expected to be released later this week. Movement also had to do with comments from Janet Yellen regarding the chances of a soft landing for the economy.
Tuesday S&P 500 0.57% | NASDAQ 1.04%
Equities retreated all the gains from Monday. The move was likely tied to the very reason markets rose on Monday. Little is known about how inflation data out this week will impact the direction of future rates. The see-saw trade is a testament to that uncertainty.
Wednesday S&P 500 0.12% | NASDAQ 0.29%
Inflation data firmed more than expected, but markets rose. The underlying increase was due to fuel expenses. They are typically very volatile and transient. The reading means the Federal Reserve Board (FRB) is on pace to hold rates steady for their upcoming meeting.
Thursday S&P 500 0.84% | NASDAQ 0.81%
Markets continued the climb from Wednesday. This came even as retail sales and producer price index (inflation gauge) beat expectations. Both signal more inflation and more rate hikes ahead. This data increases the likelihood of a November hike as the next meeting seems to be firmly in ‘pause’ mode.
Friday S&P 500 1.22% | NASDAQ 1.56%
Weaker than expected consumer sentiment and the United Auto Workers (UAW) strike put a dampener on the week. The UAW strike at first, should have little economic impact as wages will continue from the strike fund. This was likely a motivator in closing 3 plants, not more. As it continues its economic impact will surely grow.
Conclusion S&P 500 0.16% | NASDAQ 0.39%
Markets were moving along nicely till Friday’s retreat. The data that moved markets early was long term inflationary information. Meanwhile, Fridays move was on the fears of the strike having legs to last a long time. The unknown with a strike (such as the long-standing SAG strike) makes it difficult to predict its implications. Inflationary data signals optimism, at least in the short term, as an FRB hike is unlikely in coming weeks.
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