Financial Economic News In Perspective
Published Friday, April 22, 2022 at: 7:57 PM EDT
The stock market had another bad week, as the Standard & Poor’s 500 dropped 2.8% Friday and lost -2.8% from last week’s closing price. The stock index is 11% lower than the all-time high of Jan. 3, back into correction territory.
About 80% of public companies that have reported earnings for the first quarter of 2022 are beating analyst expectations, according to a report in The Wall Street Journal referencing FactSet, a financial data and analytics firm.
The economy remains strong, but inflation is raging at 8.5% for the last 12 months. Inflation hasn’t been this bad in 40 years and the Federal Reserve is expected to hike rates one-half of 1% at the next meeting of the central bank’s Federal Open Market Committee meeting on May 3 and 4.
The Fed was expected to raise rates in 2022 in quarter-point increments. Hiking rates a half-point is a sign that the Fed is taking a hard line. So, it’s hard to criticize the Fed’s decision to double down on the May rate hike.
The economy is strong, according to key fundamental economic data, and the half-point rate hike is not enough to trigger a recession. It will dampen business activity and slow growth. The risk of the Fed inflation-fighting policy tipping the economy into recession – economic shrinkage for two consecutive quarters – is a legitimate fear. Fed mistakes have caused every recession in modern history.
The U.S. central bank in the last two decades has overcome the debt bubble and global financial crisis of 2008, and it engineered a roaring economic comeback from the pandemic. The Fed’s track record inspires confidence that central bankers are not going to hike rates enough to trigger a recession.
The half-point hike under current conditions is almost bold and sends a message that the Fed is prepared to act decisively if inflation worsens.
Signs that inflation may have peaked already began appearing in the past two weeks. Excluding gasoline, monthly expenses for the average American household slowed down from February to March. Meanwhile, prices cooled for used cars and consumer electronics, according to Labor Department data, indicating an easing of the supply chain problems hampering consumer spending.
The Standard & Poor’s 500 stock index closed Friday, April 22, at 4,271.78, a loss of -2.77% from Thursday. If dropped -2.78% from last week’s closing price, but it is up +62.5% from the March 23, 2020 bear market low.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
- Economists Predict Lackluster 4Q22 Growth; Fed Algorithm Predicts 4.3%
- Amid Darkening News, Positive Economic Signs
- Stocks Soared This Past Week But Economic Pain Is Still Ahead
- Factors Blurring The Likelihood Of A Recession
- Weekly Investor Update
- Stocks Rose 4.7% This Past Week, Amid A Bear Market
- 105 Years Ago In Investing: Conditions Were Much The Same As Today
- A Timely Reminder Of Why You Take Stock Risk
- Good And Bad Financial News: Weekly Investment Update
- A Financial And Tax Planning Strategy For This Week's Stock Market Plunge
- Having Trouble Tuning Out The Bad Financial Economic News?
- A Key Signal Of Strength At A Pivotal Moment In Economic History
- Despite Strong Jobs Report, Stocks Declined Last Week
- The Fed Risks A Recession To End Inflation, As Expected
- Stocks Snap Four-Week Win Streak
- Stocks Have Soared Lately, But What Should You Expect Near And Long-Term?
- Investing In An Economy Beset By Multiple Anomalies
- Despite Bad Economic News, Stocks Rose 4% In The Week Ended July 29, 2022
- Amid Bad Data Releases, Leading Economists Predict No Recession
- Good News: Real Retail Sales Dropped Fractionally In The Past Year
- Financial Economic News Analysis
- The Good News Is All This Bad News
- Four Signs A Recession Could Be Short And Shallow
- Odds Of A Soft Landing Shrunk After Friday's News