 | AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, Rates, FRB, CPI |
Markets looked ahead and did not like their chances this week. Could that bearishness yield bullishness this week?
Monday S&P 500 1.79% | NASDAQ 1.93%
The week opened with strong US economic data. Both Factory Orders and ISM Non-manufacturing PMI were stronger than expected. This showed continued expansionary pressure. While good for the economy, it also means the Federal Reserve Board (FRB) has more leeway to raise rates. This caused equities to sell off on the day. The NASDAQ led the losses as would be expected on an FRB hawkish day.
Tuesday S&P 500 1.44% | NASDAQ 2.00%
The key mover of markets on Tuesday were comments from major bank CEO’s. Those comments stressed the view of potential for a recession in 2023. These views, while not new, are concerning when conveyed from CEO’s from some of the largest banks in the nation.
Wednesday S&P 500 0.19% | NASDAQ 0.51%
As the week wears on, it is exceedingly clear that markets are squarely focused on the FRB meeting next week. The potential of rate hikes continuing aggressively into 2023 are causing losses for the markets. Additionally, consumer credit debt increased to 27B (Oct). This is a positive indication of consumer spending; however, a heavier debt burden signals risks to future spending capability.
Thursday S&P 500 0.75% | NASDAQ 1.13%
Job losses increased to 230K last week and continuing claims continue to firm. Weaker employment data was taken as a positive on Thursday as it provides less leeway for an aggressive FRB.
Friday S&P 500 0.74% | NASDAQ 0.70%
Core Producer Price Index data (PPI) spooked markets as the reading came in stronger than expected. This could be a bad omen for Consumer Price Index data (CPI) due out on Tuesday of this week. A firmer CPI reading caused a more aggressive FRB this past June and would be expected again here in December.
Conclusion S&P 500 3.37% | NASDAQ 3.99%
CPI could cause heavy volatility on Tuesday with the FRB meeting and increasing rates the following day. Expect a wild ride this week as news unfolds, both here and internationally, with central banks meeting across the globe. Looking ahead, higher rates and risks to equities in the event of a recession signal opportunity within the bond markets.
~ Your Future… Our Services… Together! ~
Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:
FOR MORE INFORMATION:
If you would like to receive this weekly article and other timely information follow us, here.
Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long-term holding strategy is the best strategy in any market environment.
Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.