Central banks are hawkish. Stocks popped higher, anyway.
Last week, despite signs that inflation is slowing, U.S. Federal Reserve (Fed) officials emphasized their commitment to tightening monetary policy to lower inflation. Several indicated they anticipate a third consecutive rate hike of 75 basis points, reported Craig Torres and Matthew Boesler of Bloomberg.
Investors seemed to disregard the Fed as U.S. stocks moved higher, snapping a three-week losing streak. The Standard & Poor’s 500 Index finished the week up 3.6 percent, the Dow Jones Industrial Average gained 2.7 percent, and the Nasdaq Composite rose 4.1 percent, reported Christine Idzelis and Joseph Adinolfi of MarketWatch.
The European Central Bank (ECB) announced a rate increase of 75 basis points and revised its expectations for inflation higher last week. The ECB emphasized that tightening will continue and more rate hikes are likely. European stocks rose following the ECB’s announcement, reported Karen Gilchrist and Katrina Bishop of CNBC.
Last week’s stock market gains were a bit confounding, especially when you consider the fact that money has been flowing out of global equities and bonds and into cash and investments that are perceived to be safe havens. The stock market’s performance may be the result of investors whose only option was to buy shares. Bloomberg’s Lu Wang and Isabelle Lee explained:
“In a week that saw discretionary buyers beat a quick retreat from risky assets, another set of traders stood up to halt a three-week plunge in the S&P 500: those with little choice but to buy. They included short sellers, whose rush to cover lifted stocks [that] they’re betting against to gains of more than twice the market’s. Options dealers were another bullish force after getting caught needing to boost hedges by buying stocks when they rise.”
Major U.S. stock indices moved higher last week, and U.S. Treasury yields moved higher across the yield curve.
|Data as of 9/9/22||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor's 500 Index||3.7%||-14.7%||-9.5%||11.0%||10.3%||11.0%|
|Dow Jones Global ex-U.S. Index||0.8||-20.6||-22.8||-0.1||-1.0||2.0|
|10-year Treasury Note (yield only)||3.3||N/A||1.3||1.6||2.1||1.7|
|Gold (per ounce)||1.1||-4.9||-3.2||4.7||5.3||0.0|
|Bloomberg Commodity Index||-0.5||19.5||22.7||14.7||6.9||-2.2|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
STAY SAFE WHEN MAKING PEER-TO-PEER PAYMENTS. Peer-to-peer (P2P) payment apps let you quickly send money to other people from a bank account, credit card or another source. All you need is their phone number, email address or username. P2P apps are convenient ways for friends to split the bill for dinner, roommates to pay their share of utility, streaming, or other bills, and parents to send money to children, reported Ellen Sheng of CNBC.
Before getting too comfortable with the convenience of P2P apps, it's important to understand their risks and limitations. “No app provides fraud protection beyond tools to protect your account. If you authorize a payment and the transaction turns out to be a scam or fraud, there’s not much you can do. If your account is hacked, you can reach out to customer support for help. In any case, treat your electronic payments with the same care you apply to cash payments,” reported The New York Times’ Wirecutter.
According to Consumer Reports, there were more than 70,000 reports of fraud in mobile payment apps in 2021. Here are a few things to consider and some steps to take to protect your money when using P2P payment apps.
Digital transfers are handy. That may be one reason P2P payments and digital banking are becoming more common. To stay safe, make sure to protect your login information and know who is receiving the money.
Weekly Focus – Think About It
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https://www.bloomberg.com/news/articles/2022-09-10/fed-rush-to-cool-inflation-set-to-continue-with-another-big-hike (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/2022-09-12_Bloomberg_Fed%20Rush%20to%20Cool%20Inflation%20Set%20to%20Continue%20with%20Another%20Big%20Hike_1.pdf)
https://www.bloomberg.com/news/articles/2022-09-09/forced-buying-puts-a-floor-under-stocks-nobody-else-wants-to-own?leadSource=uverify%20wall (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/2022-09-12_Bloomberg_Forced%20Buying%20Puts%20a%20Floor%20Under%20Stocks%20Nobody%20Else%20Wants%20to%20Own_5.pdf)
https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/2022-09-12_Barrons_Data_6.pdf)
https://www.nytimes.com/wirecutter/money/mobile-payment-apps-privacy/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/2022-09-12_New%20York%20Times_Which%20Mobile%20Payments%20are%20Most%20Private%20and%20Secure_9.pdf)