Markets Rebound Despite Tough Talk From the Fed

September 12, 2022

Markets Rebound Despite Tough Talk From the Fed Photo

The S&P 500 Index ended a three-week losing streak last week, as investors looked beyond tough talk from numerous Federal Reserve (Fed) officials suggesting that another 75-basis-point rate hike would be likely at the upcoming Fed meeting on Sept. 20-21. The equity market rally was broad-based, with all 11 industry sectors in the S&P 500 Index finishing the week higher. 

Global central banks are buying into the Fed’s approach to frontload rate hikes, as the European Central Bank and Bank of Canada raised interest rates by 75 basis points last week. The U.S. dollar weakened against its major trading partners in response to the outlook for more aggressive monetary tightening across the globe.

The week’s economic calendar will provide important data on recent trends in inflation and the state of the U.S. consumer. The August Consumer Price Index will be released Tuesday, followed by the Producer Price Index on Wednesday. Economists expect slightly negative prints for both inflation readings as lower energy prices apply downward pressure. August retail sales data will be released Thursday, with the final reading of the University of Michigan consumer sentiment for August out Friday.

Tags: Federal Reserve | Market rally | Consumer Price Index (CPI) | Producer Price Index (PPI) | Inflation

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