Friends
As stocks opened several hundred Dow points higher, I read online a pundit declare that it appears that investors have come to grips with the Fed policy and are now focused on corporate earnings. Well, that lasted about 10 minutes. By late morning Fed Chair Powell was hurling hawkish hand grenades at the markets during a Q&A session and stocks and bonds tumbled. One might conclude that the Fed doesn’t want stocks to go up. They are fighting inflation after all and stocks moving higher creating wealth effect doesn’t help. I say that with tongue planted firmly in cheek. It’s painfully obvious that the Fed is using every move higher that stocks make to pump the gas pedal on monetary policy.
As for today, by the close the Dow Jones Industrial Average was down 368 points to finish the day at 34,792. The S&P 500 was down 65 points to close at 4,393. The Nasdaq Composite Index was down 278 points to close at 13,174. Gold was down $2 to trade at $1,953 per ounce, while oil was up $1.18 to trade at $103.37. Bonds sold off moving interest rates higher and causing some interesting shape in the yield curve.
As mentioned, just when folks thought earnings might take precedence for a week or two, it was right back to the Fed. Again, this is why we have stressed that this year is all about volatility. The Fed is the wild card, and they seem to want to use any positivity in the stock market to accelerate their inflation fighting policies- or at least their jawboning.
Have a nice evening everyone.
