Week of September 19, 2022

Bill Hastie |

U.S. equity markets declined last week, primarily on Tuesday’s announcement of August CPI and core CPI and led to a more than 1,200-point drop on the Dow.  While August “headline” CPI slipped from 8.5% in July to 8.3%, it was the core CPI told the story.  Taking out volatile food and energy process, core CPI represents all other goods that are consumed by the public and jumped 0.6% for the month alone.  The S&P 500 sank 4.8% last week, with much of the loss coming from a 4.3% decline on Tuesday.  The S&P 500 and NASDAQ logged their worst weekly percentage drop since June.

Goldman Sachs cut its forecast for 2023 U.S. GDP (gross domestic product) last Friday as it projects a more aggressive Fed and sees the jobless rate higher that it previously projected.  The Federal Reserve Bank of Atlanta, reporting on its website GDPNow, reduced its outlook for 3Q2022 GDP on September 15 from 1.3% to 0.5%.

Futures bets on Monday, September 19 showed that investors anticipate an 80% chance that the Fed will raise interest rates by 0.75 percentage point, according to CME Group, when the Fed meets September 20 and 21.  The data also showed investors anticipating a 21% chance that the Fed will lift rates by a full percentage point.

Last Friday, FedEx sank 21.4% for its biggest single-day sell-off on record Friday after warning investors that profits for its fiscal first quarter will fall short of forecasts because of a drop-off in business.  The package delivery service is also shuttering storefronts and corporate offices and expects business conditions to further weaken.