Heart Stopper? | February 17, 2023

AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA®
TITLE:       Investment Adviser Rep – CCO
TAGS:   S&P 500, NASDAQ, CPI, FRB, Retail Sales

No heart stoppers this last week as markets ended about even. Could the released information lead to a heart stopper soon?

Monday   S&P 500 1.15% | NASDAQ 1.48%

The week opened on a very upbeat note. The move higher came before the release of Consumer Price Index (CPI) data. The investor move means they viewed the inflation expectation to be overdone. This means that lower inflation is expected by the common investor.

Tuesday   S&P 500 0.03% | NASDAQ 0.58%

Happy Valentine’s Day! CPI data out on Tuesday led to a mixed market. The data landed within the range expected. On a year over year basis, it fell 0.10%. The one month rise of 0.5% was headlined by energy, which experienced a 2% increase just last month.

Wednesday  S&P 500 0.28% | NASDAQ 0.92%

Retail sales led markets higher on Wednesday. The confluence of CPI and retail sales on back-to-back days made for an interesting market reaction. Standing alone, strong retails sales would be a signal of inflation persisting in the future. Coming a day after CPI, it acted as a reflection of continued movement on inflation, while consumption sustains. Markets rose on the news.

Thursday   S&P 500 1.38% | NASDAQ 1.78%

Weekly jobless claims continue to float lower. The strong job market continues to add fuel to the fire around FRB rate hikes.  If the job market continues to look strong, then the likelihood of more expected rate hikes increases.

Friday   S&P 500 0.28% | NASDAQ 0.58%

The losing trend from Thursday carried into Friday. FRB members made sure to indicate that more resilient inflation is too big of a risk for them to underestimate. The risk is causing an additional rate hike in May to be increasingly priced in.

Conclusion   S&P 500 0.28% | NASDAQ 0.59%

The movement of the market week over week would send the wrong message. The markets barely moved, but the ride to get there was pretty volatile. The first three days were ambitious and showed promise, but the last two days reminded us of why 2022 was such a raw year as inflation dominated the headlines. Much of 2023 will be like this as we wait on bated breath for CPI results, jobs data, and any other piece of information that might tell us what to expect from the FRB.

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