A look back
- Stocks dropped in the holiday-shortened week with the S&P 500 falling -0.8%. The energy sector retained its leadership position, while health care was the weakest sector. Meanwhile, international developed markets declined -1.4%.
- Interest rates continued their march higher with the 10-year yield briefly eclipsing 5.00% before ending the week a touch below. The 30-year yield closed at 5.35%, its highest close since 2007, while the 2-year yield rose 0.25% on the week to finish at 4.62%.
- Inflation was the primary focus last week, and both the Consumer and Producer Price Indexes (CPI and PPI) remained well above the Federal Reserve’s (Fed’s) 2% target. Markets subsequently increased the odds of a rate hike at this week’s policy meeting.
A look ahead
- The Fed’s policy meeting will be the main event, with the central bank expected to increase interest rates for the first time since July 2023. Investors will also parse the Fed’s Summary of Economic Projections, often referred to as the “dot plot,” for insight into the potential path of monetary policy.
- With earnings season in the rearview and very few companies reporting results, attention will shift to industry conferences for management commentary and updates on how the quarter is progressing.
- Economic releases: Retail Sales, FOMC Meeting, Housing Starts, Pending Home Sales, Industrial Production, Leading Economic Index.
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