Will Silence Be Golden? | December 2, 2022

AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA®
TITLE:       Investment Adviser Rep – CCO
TAGS:   S&P 500, NASDAQ, China, Homes FRB, Jobs

The Fed lifted markets last week. Will two weeks of silence from the Fed be golden or cause volatility?

Monday   S&P 500 1.54% | NASDAQ 1.58%

Markets opened the week in the red as volumes returned to normal levels. Protests in China brought concern for disruption in addition to the effects of their zero COVID policy.

Tuesday   S&P 500 0.16% | NASDAQ 0.59%

Equities opened in the green this morning but faded to red quickly. Stronger yields weighed on markets as assumptions of a 0.50% rate hike for December may be wavering towards 0.75%. Home prices rose 11% over the last 12 months, 1% lower than last month.

Wednesday   S&P 500 3.09% | NASDAQ 4.41%

The Federal Reserve Board (FRB) chair, Jerome Powell, spoke today and markets listened. Before he spoke markets bounced around, down about 0.50%. After he spoke markets took off like a rocket, rising 3%. The word “patience” was largely in focus, which was interpreted as a dovish shift.

Thursday   S&P 500 0.08% | NASDAQ 0.12%

Markets ended Thursday about breakeven. This should be seen as a win after the strong Wednesday. Often times the day following a major shift is riddled with volatility in the opposite direction. A breakeven Thursday signals that Wednesdays gains were likely not overdone.

Friday   S&P 500 0.12% | NASDAQ 0.18%

Happy Jobs Friday! Jobs data did not disappoint. Unfortunately, a good jobs report signals more room for FRB movement and means disappointing stock returns. Markets opened in the red and hung out there most of Friday. They posted a late rally to come back to even for the day.

Conclusion   S&P 500 1.13% | NASDAQ 2.10%

There was red littered across the week, but the strong FRB speaking event on Wednesday helped push the entire week into the green. Over the next two weeks the FRB will be moving into their quite period leading up to their December meeting. This means lots of speculation with not FRB speaking points. Expect volatility to continue over the next few weeks.

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