The Week on Wall Street
Stocks tumbled on Friday, sending stocks to a weekly loss after an otherwise quiet August week of trading.
The Dow Jones Industrial Average slipped -0.16%, while the Standard & Poor’s 500 lost 1.21%. The Nasdaq Composite index declined 2.62% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 0.88%.1,2,3
Summer Rally Hits Pause Button
The market rally that began in mid-June paused last week. Despite the week’s losses, stocks exhibited resiliency in the face of a string of troubling economic news that included flat retail sales, weak housing numbers, an inversion in the yield curve, and tepid economic data out of China.
Nevertheless, stocks tumbled on Friday amid hawkish comments about future rate hikes, rising bond yields, and ahead of the annual meeting of global central bankers in Jackson Hole, Wyoming, in which Fed Chair Jerome Powell is scheduled to speak on August 26th.
Expect More Rate Hikes
Minutes from July’s Federal Open Market Committee meeting indicated that additional rate hikes would be needed to help manage inflation. Fed officials did acknowledge that further rate hikes risked unintended economic weakness because of the time it takes for higher rates to work through the economy. The committee indicated that they might slow rate hikes to determine the impact of previous rate increases.4
The minutes also contained the Fed’s latest economic forecasts, which projected inflation to decline faster than its June estimate due to a bigger economic slowdown in the year’s second half. 5
T H E W E E K L Y R I D D L E
I am in the center of gravity, and part of every victory. I am clearly seen in the midst of a river. I could name three who are in love with me and have three associates in vice. What am I?
LAST WEEK’S RIDDLE: Trains travel from one town to another town all day, always on the same track, always going nonstop and at the same speed. The noon train took 80 minutes to complete the trip, but the 4 PM train took an hour and 20 minutes. Why?
ANSWER: 80 minutes is the same as an hour and 20 minutes.
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