 | AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, Tech, FRB, Jobs |
Last week was a roller coaster ride. Will it continue? Is this week going to leave you nauseous?
Monday S&P 500 0.75% | NASDAQ 1.03%
Happy Halloween! Markets opened with a scare as higher moved rates, a stronger US dollar, and the tech sector caused concerns. There should be some volatility this week. The week holds the highest percentage of earnings reports for the season. Additionally, we get the Federal Reserve Board (FRB) decision on Wednesday and the October jobs report on Friday.
Tuesday S&P 500 0.41% | NASDAQ 0.89%
Markets moved into the red at the open on ISM and JOLTs data. News of a potential China reopening buoyed energy stocks and caused a lowered equity market. The reopening would be a plus for the global economy and consumer goods inflation. At the same time, headline inflation would suffer as China’s energy demand levels would likely triple.
Wednesday S&P 500 2.50% | NASDAQ 3.36%
The FRB pivoted, but it was not the pivot the market expected (or wanted). The markets were hoping for the FRB to indicate that they will be slowing their pace of rate increases. Instead, the FRB delivered an enigma. For all of 2022 the FRB has been extremely transparent to get markets to do the heavy lifting for them. They knew delivering a message of a slowdown would be perceived as a pivot and markets would rise. A market rise is not the concern, however, as a rally in the bond market would mean a fall in rates. Lower rates would accelerate consumer spending and prolong inflation pressures. They therefore decided to become vague and allow themselves some room to ACTUALLY be data dependent. The press conference did cause concern that the FRB will be more aggressive in the near term. This likely means a .75% rate hike for December and a terminal rate in the vicinity of 5%.
Thursday S&P 500 1.06% | NASDAQ 1.73%
Overnight the story on news outlets was that the FRB may slow down their rate hikes. The counter story could have dominated and cause a rise in markets on Thursday… Nope. Disappointing earnings, a UK rate hike, layoffs, and higher rates all led the headlines which led the markets lower.
Friday S&P 500 2.46% | NASDAQ 2.87%
Happy Jobs Friday! Unemployment rose to 3.7% even as nonfarm payrolls added 261K jobs. Wage growth fell below 5% coming in at 4.7%. Slowing wage growth could be seen as future inflationary pressures reducing. Announcements of layoffs are starting to accelerate (some notable names: Snap, Twitter, Netflix, and Peloton). The numbers associated with layoffs have been reasonably small, but that will likely change in coming months.
Conclusion S&P 500 3.35% | NASDAQ 5.65%
Generally, this would have been viewed as a busy week for markets. The FRB raised rates on Wednesday. The UK did the same on Thursday. Jobs Data on Friday capping the week. This coming week holds a similarly think flow of headlines. There is the election on Tuesday. CPI data will be released on Thursday. We will get the Michigan Consumer Sentiment data to close the week. This is not generally a large player but given the holiday season fast approaching, it may carry more weight.
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