Weekly Economic Update for August 29, 2022

In this week’s recap: Powell comments spur sell-off on Wall Street

Weekly Economic Update

THE WEEK ON WALL STREET

A comprehensive sell-off on Friday following comments by Fed Chair Jerome Powell drove stocks to losses for the week.

The Dow Jones Industrial Average tumbled 4.22%, while the Standard & Poor’s 500 dropped 4.04%. The Nasdaq Composite index fell 4.44% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.10%.^1,2,3

UNDER PRESSURE

Stocks dropped on Friday following Powell's remarks reiterating the Fed's inflation-fighting resolve. While his comments did not break new ground, markets reacted severely, perhaps on worries that interest rate hikes may continue into next year.

After starting the week sharply lower on renewed rising interest rates and economic slowdown fears, markets staged a modest turnaround beginning mid-week. Stocks rallied on Thursday, sparked by a revised Gross Domestic Product estimate showing the economy's shrinking less than initially estimated. Thursday's rally also got a boost from regional Federal Reserve Bank presidents, who suggested future rate hikes may be in line with market expectations.

POWELL AT JACKSON HOLE

In his much-anticipated speech at the Jackson Hole Economic Symposium, Powell unflinchingly reaffirmed the Fed's commitment to raising rates to lower inflation, even if it results in causing pain to individuals and businesses.

Wall Street focused on Powell's presentation in the hope it might provide greater clarity on future Fed direction, though his remarks ultimately went no further than restating past communications. Powell commented, "We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to two percent." This statement may have put to rest any thoughts that the Fed would soon pivot on rate hikes. ₄

T I P O F T H E W E E K

We all have impulses that can make us spend more and save less. Recognizing them can help us to improve our financial behaviors.

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Consumer Confidence. Job Openings and Turnover Survey (JOLTS).

Wednesday: Automated Data Processing (ADP).

Thursday: Jobless Claims. Institute for Supply Management (ISM) Manufacturing Index.

Friday: Employment Situation. Factory Orders.

Source: Econoday, August 26, 2022

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Best Buy Co., Inc. (BBY), HP, Inc. (HPQ).

Thursday: Broadcom, Inc. (AVGO), Hormel Foods Corporation (HRL).

Source: Zacks, August 26, 2022

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Q U O T E O F T H E W E E K

“The road less traveled is sometimes fraught with barricades, bumps, and uncharted terrain. But it is on that road where your character is truly tested.”

KATIE COURIC

T H E W E E K L Y R I D D L E

What can run but never walks, has a mouth but never eats, has a head but never thinks, and has a bed but never sleeps?

LAST WEEK’S RIDDLE: I am in the center of gravity, and part of every victory. I am clearly seen in the midst of a river. I could name three who are in love with me and have three associates in vice. What am I?

ANSWER: The letter "V."

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

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All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.

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CITATIONS:

1. The Wall Street Journal, August 26, 2022

2. The Wall Street Journal, August 26, 2022

3. The Wall Street Journal, August 26, 2022

4. The Wall Street Journal, August 26, 2022