All eyes are on the upcoming Federal Reserve (Fed) meeting later this week. After raising rates for the 11th time (since March 2022) during their last meeting in July, market expectations are for a pause to rate hikes this time around.
The Fed’s meeting will focus on inflation and a recent uptick in those numbers for August. As measured by the Consumer Price Index (CPI), inflation rose to an annual rate of 3.7%, a 0.6% monthly gain and the fastest pace since mid-2022. However, in context, much of this rate was due to higher energy prices (gasoline prices surged by 10.6% month-over-month1). When food and energy are excluded, the core inflation rate rose a more modest 0.3%.2
In fact, the 3-month annualized core CPI, excluding food and energy, stands at 2.4%3, which is very close to the Fed’s stated target of 2.0%. Hopefully, we’ll have some more clarity at the conclusion of this week’s meeting. As Fed Chairman, Jerome Powell, put it in July, the Fed “is navigating by the stars under cloudy skies.”
Reviewing returns for the first half of September, the markets all posted losses. As of market close on September 15th, the Dow was down 104 points (0.3%), the S&P 500 fell 57 points (1.27%) and the NASDAQ Composite Index (NASDAQ) dropped 327 points (2.33%).
1,3 www.jpmorgan.com “Weekly Market Recap; Week of September 18, 2023” September 18, 2023
2 www.jhinvestments.com “Weekly Market Recap; Week ended September 15” September 18, 2023
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