Skip to Content

Weekly Economic Update: September 20th, 2022

Presented by Nicholas Wealth Management

September 20th, 2022

Weekly Market Update

In this week’s recap: White hot inflation report alarms investors.

The Week on Wall Street

A hotter-than-expected inflation report sent stocks sharply lower last week, as investors faced the prospect of more aggressive interest rate hikes by the Federal Reserve for perhaps a longer period.

The Dow Jones Industrial Average fell 4.13%, while the Standard & Poor’s 500 lost 4.77%. The Nasdaq Composite index dropped 5.48% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dipped 1.78%.1,2,3

Inflation Deflates Markets

Stocks suffered their worst day in more than two years last Tuesday as markets were caught off-guard by a higher-than-anticipated August inflation report.

Markets expected the August report to show a substantial cooling of inflation, potentially allowing the Fed to ease up on interest rate hikes. Instead, the elevated inflation number not only undercut those easing hopes, but also raised the possibility of a more significant rate hike. On Tuesday, traders assigned a 28% probability of a 100-basis point hike, from a 0% chance just the day before. Price action remained choppy for the remainder of the week, closing the week with additional losses as a global package-delivery company warned of a worldwide recession.4

August CPI Disappoints

August’s Consumer Price Index (CPI) rose 8.3% from a year ago, showing a continued deceleration in price increases (July’s CPI was 8.5%, and June’s was 9.1%). Despite moderating price increases, traders were disappointed, given the general expectation of a more substantial slowdown in inflation.5

Core inflation (excluding food and energy) was particularly alarming to investors, which jumped 6.3% year-over-year. That number was well above the 5.9% rate from June and July. From the market’s perspective, sufficient inflationary pressures exist for the Fed to maintain its hawkish interest rate policy for possibly longer than investors had hoped.6

Company Warnings

Investors face an additional risk from unexpected company warnings as we approach third-quarter earnings.
Last Thursday, FedEx withdrew guidance for the rest of the fiscal year and sounded the alarm for a global recession as a likely possibility. The profit warning caused the largest daily drop for the company at more than 20%.7
Yesterday, Ford announced $1 billion in extra costs for the third quarter due to supply chain issues and inflation. Ford reaffirmed full-year guidance and doesn't foresee a problem delivering vehicles by the end of the fourth quarter.8 Shares of Ford were down more than 5% to start the day.

Tip of the Week

The fine print on a lease or a mortgage is always worth reading. Ask the business owners and homeowners who have learned this from experience.


Retire Ready with David Nicholas airs every Saturday at 6:00 PM on 95.5 WSB. Be sure to tune in this weekend! If you missed this past weekend's show, CLICK HERE to listen!


Be sure to subscribe to our YouTube page for all of Nicholas Wealth's media commentaries CLICK HERE!


  1. The Wall Street Journal, September 16, 2022
  2. The Wall Street Journal, September 16, 2022
  3. The Wall Street Journal, September 16, 2022
  4. The Wall Street Journal, September 13, 2022
  5. The Wall Street Journal, September 13, 2022
  6. The Wall Street Journal, September 13, 2022

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2020 FMG Suite.