The Markets (as of market close September 23, 2022)

Investors endured their second harrowing week in a row as the Federal Reserve continued to raise interest rates aggressively to combat inflation. New signs of slowing global growth and Russia’s threats to escalate the war in Ukraine provided more reasons for selloffs in the stock and bond markets by nervous investors. The Nasdaq, the Russell 2000, and the S&P 500 all sunk deeper into bear territory, and the Dow dropped to its lowest level of 2022. Strangely, bonds are not behaving like the port in the storm that investors tend to expect. Treasury prices have fallen and yields have risen to heights not seen in more than a decade. The dollar is exhibiting unusual strength against many foreign currencies, including the pound, the euro and the yen. Oil prices fell to their lowest levels since January.

On Friday, stock market investors continued their tantrum for a fourth straight day after a report showed that economic activity in Europe declined sharply in September. The Global Dow took the biggest hit, skidding 2.6%, followed closely by the Russell 2000 (-2.5%). The Nasdaq dropped 1.8% and S&P 500 fell 1.7%. The Dow was down 1.6%, ending the day at its lowest level of 2022. Energy stocks took a particularly hard beating, as crude oil plunged 5% to land below $80 per barrel. Gold prices fell and the dollar strengthened. Ten-yield Treasury yields were little changed.

Eye on the Week Ahead

There are plenty of important economic reports out during the last week of September. The final estimate of gross domestic product is out this week. It is not expected to change much from the prior estimate, which showed the economy retracted by 0.6% in the second quarter. The report on personal income and outlays for August is also available this week. The personal consumption expenditures price index, a key inflation indicator favored by the Federal Reserve, is included in this report.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI, Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Forecasts are based on current conditions, subject to change, and may not come to pass. U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest. The principal value of Treasury securities and other bonds fluctuates with market conditions. Bonds are subject to inflation, interest-rate, and credit risks. As interest rates rise, bond prices typically fall. A bond sold or redeemed prior to maturity may be subject to loss. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 largest, publicly traded companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indexes listed are unmanaged and are not available for direct investment.