 | AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, Inflation, FRB |
Inflation was down and so were markets. Where should it go from here?
Monday S&P 500 0.75% | NASDAQ 1.04%
The week started with a meh… There was a slide through out the morning then an afternoon rebound. Bond markets were closed in observance of the holiday. JPMorgan’s CEO, Jamie Dimon, indicated that the headwinds are leading to a global recession. He also indicated that he felt that Europe was already in a recession.
Tuesday S&P 500 0.65% | NASDAQ 1.10%
Markets ebbed and flowed between losses, then profits, back to losses. The news feed throughout the week will be plentiful as bank earnings and inflation data are on tap. The 10-year treasury flirted with 4% again, a move that signals low expectations for good news around inflation this week.
Wednesday S&P 500 0.33% | NASDAQ 0.09%
Producer Prices fell less than expected in September. This is a leading indicator to inflation risks. This would typically mean markets would be down on the day. To the contrary markets opened in the green. It then oscillated between green and red 17 times trying to find a direction. It never did settle down, markets ended relatively even on the day. Thursday will bring Consumer Price Index (CPI) data and wage increase information for social security earners.
Thursday S&P 500 2.60% | NASDAQ 2.23%
Markets defied logic on Thursday. The CPI reading came in higher than expected at 8.2% which should have led to a sell off. No, markets rallied. Corporate earnings were favorable, but that should not have out shined CPI data. CPI information firmed sentiment of a 0.75% hike in November and even the potential of a 0.75% hike in December.
Friday S&P 500 2.37% | NASDAQ 3.08%
Expectations for future inflation rose. This sent markets lower on the day. A higher inflation expectation means the Federal Reserve Board (FRB) is currently losing the battle to inflation. Less people are believing that their efforts will slow the momentum of inflation. As a result, the FRB is likely to become more aggressive. The signal sent NASDAQ shares lower than the S&P 500, but both were largely rattled.
Conclusion S&P 500 1.55% | NASDAQ 3.11%
This was a week to forget. A disappointing fact as it was the first week of earnings for the 3rd quarter. Banks did well, but bearish momentum on the inflation front was overwhelming. There should be a bear market rally embedded this fall but expect that to be short lived.
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