 | AUTHOR: Jason Roque, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ |
Markets retreated last week. More rate hikes bring a feeling of fear to markets that is all too familiar…
Monday S&P 500 -% | NASDAQ -%
Happy Juneteenth!
Tuesday S&P 500 0.47% | NASDAQ 0.16%
Markets pulled back some of the momentum felt over the last few weeks. Losses were led by the S&P 500. This shows that markets still favored Tech shares. They see a temporary pullback with little action from the Federal Reserve Board (FRB) forthcoming.
Wednesday S&P 500 0.54% | NASDAQ 1.21%
FRB Chair Powell testified on Capitol Hill Wednesday and Thursday. He was sure to support the thesis of additional rate hikes. This was under the premise of destroying any chance of inflation resurging. Strong messaging will get forward Inflation expectations to stay low. If inflation expectations begin to get unanchored, then this turns into a long-term battle. If people start thinking inflation will be an issue for a prolonged period, it begins to adversely affect their spending.
Thursday S&P 500 0.37% | NASDAQ 0.95%
Rates, rates, rates… The UK raised its benchmark rate as did several Eurozone central banks. Markets rebounded on day two of Chairman Powells testimony, however the message did not change. The focus was still squarely on additional hiking that would be needed. This may have been a breather rally after the week had opened on a more negative tone.
Friday S&P 500 0.77% | NASDAQ 1.01%
Projections for the manufacturing sector showed PMI slipping into contraction territory. The information coupled with recent hawkishness from the FRB raised concerns of a potential recession in the US. This very quickly halted the tick up from Thursday and pushed markets lower, led by the NASDAQ Composite.
Conclusion S&P 500 1.39% | NASDAQ 1.44%
For the first time in the last month, markets ended the week lower. A common trend throughout 2022 and it can conjure feelings of anxiety that we might return to that environment. Not only because of the losses–but the repeated messaging from the FRB this week that additional hikes are needed. The message is pressing on in reaction to markets discounting a hike later this year. The FRB is doing its best to send the message that the markets are misguided in their beliefs. They are trying to get open market rates to stop discounting forward rates to allow for tighter monetary policy. It remains to be seen if the economy has the strength to endure rate increases later this year. As of now economic production, jobless claims, and debt levels all point to yes.
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