Mid-Week Market Minute 2.22.23

Market Updates

Stocks Struggle Awaiting Key Reports

Stocks in the U.S. struggled to find their footing this week as investors await the release of the Federal Reserve meeting minutes on Wednesday. The S&P 500 was lower by about 2% on Tuesday, marking the worst day of 2023 thus far. This comes on the heels of last week’s higher-than-expected inflation reports, which showed headline CPI inflation rose at a clip of 6.4% over the past year.

Minutes from the most recent Federal Reserve meeting are due out at 1 p.m. Central on Wednesday. Investors will pay close attention to the report for any insights into the future path of interest rate policy. Currently, the futures markets are pricing in the possibility of three additional 0.25% (25 basis point) rate hikes for the remainder of the year, which would leave the upper end of the federal funds rate around 5.50% by early summer.

On the data front, a flash reading for February showed the S&P Global Services Purchasing Managers Index (PMI) and the Composite PMI back in expansionary territory, suggesting a resilient economy despite restrictive monetary policy. On the housing front, existing home sales fell for the 12th consecutive month, falling 0.7% month-over-month. Looking forward to the rest of the week, a key release will be this Friday, when the personal income and outlays report is released. This report includes the PCE price index, which is closely watched by the Fed. The annualized core PCE price index for January is expected to fall to 4.3% from 4.4% the previous month, as markets hope price pressures continue to fall.

Source: GSAM, CNBC, JPMorgan

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