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At this point, investors should be used to volatility. Despite being in the summer doldrums, the markets have been pretty active in terms of gains and losses. And that has continued this week. The chief concern continues to be the Federal Reserve. As the economy has slowed, the Fed has taken a more dovish stance towards interest rates. At its last FOMC meeting, it continued with its patient stance. For many traders, expectations of a rate cut are now very much baked into the market. However, with testimony from Chair Powell and the FOMC meeting minutes being released this week, investors were unsure on just what might happen.
Elsewhere, data continued to present itself as mixed. Measures of inflation, unemployment and general economic health showed a slight uptick during the week. While in reality that’s a good sign, it adds fuel to the fire that the Fed doesn’t have to cut rates anytime soon. Naturally, that continued to put traders on the edge.
However, the earnings front proved to be quite fruitful for traders this week. The number of reports was just a trickle and while so-called earnings season is really over, the few bellwethers still left reporting their quarterly results seemed positive. This helped lift the gloomy Fed-induced picture and reduce some of the week’s losses.
All in all, the market continued to ebb and flow based on future expectations. With neither side really winning.
Be sure to check out our previous Wrap here, when the shortened week was sparked by trade.