The S&P 500 is down 23% from its January peak.
After one of the worst weeks for the stock market in 2022, two factors could swing the market over the next few days and set investors up for a tumultuous fourth quarter.
The market is reeling after a broad selloff on Friday, capping off a two-week swoon that took the
down 9.2%, to 3693. The index is down 23% from its January peak. Federal Reserve Chairman Jerome Powell has made it clear that the Fed’s primary concern is inflation, and the central bank is willing to impose financial pain to bring it down. Investors are increasingly believing him.
That means that the market is likely to swing on two main themes over the next few weeks—inflation data and any hints of what the Fed plans to do in their next few meetings. In the next week, more of those hints could be on their way.
Investors will hear from quite a few Fed officials and will be watching closely for language that indicates any splits among the board members. Twelve of the 19 Fed governors and presidents are speaking this coming week, “with virtually all appearances potentially touching on the economic outlook or monetary policy,” notes Deutsche Bank economists led by Brett Ryan.
While all of the Fed members appear intent on continuing to increase rates from the current 3.0%-3.25% range, there are important disagreements too. For instance, the “dot-plots” that track where Fed officials see economic data and interest rates in the future show that members are evenly split between those who expect Federal Funds rates to peak at 4.75% next year, and those who see 4.5% and 4.25% as the top rates. Those…