What happened this week
Friday saw the end of the Wall Street’s summer rally; the S&P 500 slid 1.29% to close at 4,228.48, while the Dow Jones Industrial Average tumbled 292.30 points, or 0.86%, to 33,706.74. The Nasdaq Composite dropped 2.01% to settle at 12,705.22.
Minutes released from the Federal Reserve’s July meeting and comments from St. Louis Federal Reserve President James Bullard indicated that the central bank probably continue hiking rates in the near term. Despite the week’s moves, many investors and traders are holding out hope for a bounce back.
In other news, President Joe Biden signed the Inflation Reduction Act into law, the more than $430 billion package is expected to reduce the deficit by more than $300 billion over a decade.
Retail activity was flat in July due to falling fuel prices and consumers turning more heavily to online shopping, major retailers reporting mixing earnings. Target’s profits dropped as it slashed prices to clear out unwanted inventory ahead of the fall back to school season. The retailer maintained its forecast for the year, choosing to take the hit this quarter and hoping to recover losses by the end of the year. Lowe’s similarly reported lower revenue than expected, $27.48 billion vs. $28.12 billion expected, CEO Marvin Ellison said despite rising costs, the consumer looks healthy. He also noted a common trend amongst major retailers; despite a drop in transaction volume they saw the average ticket per customer rose 6.5% (partially due to inflation).
Looking ahead to next week:
Wed Aug 24 Durable Goods orders for July are expected at 0.6% lower than the previous 2.0%, indicator of how confident the consumer is that the recession over or simply on pause.
Thurs Aug 25 Weekly Jobless Claims; expected another 254,000 new claims
Fri Aug 26 PCE price index; Personal Consumption Index, this index takes into account both durable and non-durable goods, as well as services, used by the Fed to measure inflation. Forecast for the monthly index shows a decline from 0.6% last month to 0.2%.
