Inflation Still Running Hot – Market Brief Sept 19, 2022

A high inflation report along with global recession fears sent equities falling, and transportation giant FedEx shook markets on Friday. Stocks fell for the fourth week in five, sinking to new September lows. The main indices all finished down last week; Dow -4.1%, S&P -4.7%, and Nasdaq -5.5%.


Last Week – Inflation reports

The S&P 500 Index returned -4.73% last week, posting its worst return since the week ending June 17. The S&P 500 Index returned -4.73% last week, posting its worst return since the week ending June 17. Consumer prices were expected to fall more than they did in August. Dropping energy prices did not offset the increasing food and shelter costs. This report confirms the Feds aggressive stance on continued rate hikes to slow down growth. At the end of the week, Fedex withdrew forward full-year guidance and reported the economic outlook was gloomy. In other data, Mortgage Rates moved over 6%, to 6.02% for the average rate on a 30-year fixed-rate mortgage. This is the highest rate in 14 years. Gas prices declined, and now average $3.69 per gallon.

Week Ahead

Three central bank rate decisions will be anticipated this week. All investors focus will be squarely on Wednesday’s Fed meeting. Annual inflation number did drop last month from 8.5% to 8.3%. But this is still very far from the Fed’s target inflation rate of 2.0%. Rumors of a 1% rate hike are floating around. Many traders are anticipating 0.75% rate increase and further increases at meetings to come. The U.S. labor market remains very strong. The tight labor market makes halting growth much more difficult. The Fed continues fighting the balance of slowing growth without pushing the economy into a recession.

Year-to-date index performance; Dow down 15.2%, S&P down 18.7%, and Nasdaq down 26.8% through the close on Friday.

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