Weekly Economic Update: August 30th, 2022

Presented by Nicholas Wealth Management

August 30th, 2022

 

Weekly Market Update

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

 

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

 

Tip of the Week

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

 

Radio

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!

 

Media

Be sure to subscribe to our YouTube page for all of David’s media commentaries CLICK HERE!

Elon Musk understands what the Biden Administration doesn’t. We need oil and gas to survive. Europe’s energy crisis should serve as a warning to America.

 

 

 

 

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

Please consult your financial professional for additional information.

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