Friends
First, I just want to remind you that we said it was likely to be a wild ride for stocks this week, and it certainly has. Traders decided today that the Fed is simply going to stay too restrictive in their monetary policy for too long and the result will be a full-fledged recession instead of the wanted soft landing. It’s not that another 50-75 basis points of Fed Funds increases by next spring wasn’t expected, it’s more the pledge by the Fed Chair that they will be keeping rates higher for longer. Of course, a year ago interest rates were zero and there were no predictions that rates were going to 4.5% by the end of the following year. We knew the Fed had turned its attention from the labor market to inflation in late November last year. We thought rates might have to go to 2% maybe even 2.5% in 2022, but 4.5% wasn’t on our bingo card either. All this just means take all of what you hear today with a grain of salt, especially when it comes to the Fed or from the Fed. Likely everything you hear will be proven wrong a year from now.
Anyway, as for today by the close the Dow Jones Industrial Average was down 764 points to 33,202. The S&P 500 was down 99 points to close at 3,895. The Nasdaq Composite Index was down 360 points to close at 10,810. Gold was down $31 to trade at $1,787 per ounce, while oil was down $1.17 to trade at $76.11 per barrel WTI.
It will be interesting to see if the bears are able to follow through on today’s selloff. We are down for the week and slightly below what has been a major support level in the S&P, so tomorrow could be telling. Stay tuned.
Have a nice evening everyone.
