Markets “In a Nutshell” for August 29, 2022
Investment Week at a Glance
Stocks finished lower for the week. The Dow Jones Industrial Average fell 4.20%, the S&P 500 was down 4.00%, and the NASDAQ fell 4.40%. Foreign stocks (MSCI EAFE) were also down, falling 1.10%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 3.02%. (Data source: Wall Street Journal)
Markets Move Lower on Powell’s Remarks
Markets all around had a rough week as Fed Chair Jerome Powell spoke on the state of the economy at the Jackson Hole Economic Symposium. Markets opened on Friday nearly flat but by the end of the day after Powell’s speech, the major indices were each down by over 3%. Powell spoke about the Fed using its tools forcefully to reduce the current inflation we are seeing. He added that this will cause some pain to the US economy as hiking rates usually results in higher unemployment and slower growth but the risk of inflation continuing is a greater threat. Powell also stated that this was no place to stop or pause rate hikes which states the Fed’s commitment to continue to raise rates in the coming months.
Market & Economy Heading into the Fall
With summer coming to an end, the market has gone through a volatile summer as fears of a recession and continuing inflation cause investors to worry. Although inflation is still at historically high levels it appears we are past peak inflation and should continue to see better data as we close out the year. Once the market has some clarity around inflation, the market should calm down a bit and be less volatile than we have seen so far this year. Once inflation is under control the Fed will be able to stop raising rates and will then have the ability to lower rates back down if the economy looks like it needs a boost. So far the economy has contracted slightly but is still in a good position with low unemployment numbers being the main reason some hesitate to call this contraction a recession.
Which Federal Reserve Bank sponsors the annual Jackson Hole Economic Symposium? (Scroll Down for Answer)
Have a Great Week!
1) Federal Reserve Bank of Kansas City, The Federal Reserve Bank of Kansas City began to sponsor this event in 1978 and since then investors have paid close attention to this meeting as it gives an insight as to what exactly the Fed is seeing in the economy and their approach going forward.