The S&P 500 Index rallied 3.68% last week on both light trading volumes and light economic data, erasing much of the prior week’s losses2. Investment-grade bonds once again suffered, with the Bloomberg Aggregate Bond Index down 0.70%2.
The ISM Services Index showed strength in August, exceeding expectations and unexpectedly increasing month on month1. Initial jobless claims came in lower than expected, indicating continued tight labor markets1.
In the week ahead, market participants will be keenly following the Consumer and Producer Price indices as well as Retail Sales data for clues as to how aggressive the Fed might continue to be in its attempt to tame inflation during the last few months of 2022. We suspect the data will start to show some easing in inflation pressures as prior Fed hikes begin to slow the economy, but we do not expect sufficient evidence for the Fed to change its hawkish policies for the foreseeable future. Investors should expect continued volatility as a result. We remain committed to patience, balance and discipline in managing our investment strategies in this uncertain environment.
Thank you for your confidence in our team,
Asset Management Department
Sequoia Financial Group