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The Market Wrap for October 8: The Debt Ceiling Drives the Market

This week investors digested threats from a variety of angles.

From the Fed’s tapering and lower economic data to the resurgence of the COVID-19 virus, volatility has been high. This week, the continued rise in energy prices coupled with the debt ceiling battle sent stocks on a roller coaster ride.

For starters, the historic rise in energy stocks has increased expectations for already high inflation for the upcoming CPI report, which has investors questioning whether or not the Fed will be forced to act before its time as the COVID-19 crisis continues to unfold.

Meanwhile, the brinkmanship in Washington has continued with a stop-gap budget and pending debt ceiling. While the U.S. has never defaulted on its debts, the worry that partisanship will actually send the U.S. into a mini-default has some analysts worried.

Add in mixed earnings guidance for the week, and you have a recipe for volatility. For much of the week, stocks trended lower before moving into positive territory.

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