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The Market Wrap for August 20: The Start of the Taper Tantrum

The major equity markets continued to be volatile this week as several factors affected traders, chief of which was the release of the Federal Reserve’s latest minutes. While the Fed has pledged to keep rates low, the recent meeting minutes showed that the central bank was considering ending its bond-purchasing programs early to help reduce inflation. Traders have been grappling with the Fed’s potential decision for weeks now, and they weren’t too happy with the idea.

Also applying pressure to the markets was poor economic data. Consumer sales slipped last month, while housing and manufacturing metrics also showed declines. Employment figures were a bright spot, however.

Helping the markets this week was the continuation of positive corporate earnings. This earnings season continues to support robust equity valuations while guidance has also been strong.

However, fears of the Fed’s tapering of its bond programs have proved to be a hard pill to swallow for many traders, and stocks were rocky during the week.

Be sure to check out our previous Wrap here, when infrastructure plans boosted the markets.

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