Weekly Market Commentary – 9/23/2022

-Darren Leavitt, CFA

It was another brutal week on Wall Street as global economic growth concerns aggravated sentiment. Investors sold risk assets in the wake of several rate hikes by global central banks. The Federal Reserve raised its policy rate by 75 basis points to 3%-3.25%. The decision to raise rates was as expected; however, the Fed’s median projected terminal rate for 2023 increased to 4.6% and showed that rates were not only expected to be higher but higher for longer. The Fed Chairman’s post-statement Q&A echoed his comments from the Economic Symposium at Jackson Hole where he reiterated the Fed would get inflation back to 2% even at the cost of sending the economy into recession.

The Bank of England raised its policy rate by 50 basis points while the new Prime Minster announced a rollback in taxes and increased fiscal spending. The conflicting measures sent the British Pound to 1.0862, a 37-year low to the US dollar. The Bank of Japan decided to keep its policy rate unchanged at -0.1%. However, the BOJ did intervene in the currency market for the first time since 1998 to defend against a weaker Yen. The Swiss National Bank increased its policy rate for the first time since 2015 by 75 basis points.

The S&P 500 lost 4.6% while breaching some key technical levels of support. The index fell below the psychological level of 3900 early in the week and subsequently broke below 3838 before testing the June closing low print of 3666.71. Goldman Sachs took their year-end target for the S&P 500 to 3600 and said the index could fall to 3150 in 2023 if a hard landing scenario plays out for the US economy. The Dow gave back 4%, the NASDAQ declined 5.1%, and the Russell 2000 shed 6.8%. International developed markets fell 6.04%, while Emerging Markets sank 4.82%.

The Treasury market wasted no time repricing the Fed’s new projected rate path. The front end of the curve took the brunt of the sell-off; however, the entire curve shifted higher. The 2-year note yield jumped thirty-six basis points to 4.21%. The 10-year yield increased by twenty-five basis points to 3.7%, while the 30-year Bond yield increased by nine basis points to 3.61%.

The commodity complex also had a rough week. The notion of a slowing global economy hit the oil markets particularly hard. WTI prices sank 7.8% or $6.71 to close at $78.69 per barrel. Similarly, Copper prices lost 5% or $0.18, closing at $3.35 an Lb. Gold prices fell 1.6% to close at $1655.90 an Oz.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.