Fed Up

The major market indices finished the week mixed to lower, with the S&P 500 falling for a second straight week, as a batch of economic data pointed to tamer core inflation and a resilient US consumer was pitted against growing expectations that the Fed will need to hold rates at elevated levels for the foreseeable future.

September 18, 2023

Performance for Week Ending 9.15.2023:

The Dow Jones Industrial Average (Dow) finished up 0.12%, the Standard & Poor’s 500 Index (S&P 500) lost 0.16% and the Nasdaq Composite Index (NASDAQ) fell 0.39%. Sector breadth was positive with 8 of the S&P sector groups closing higher. The Utilities (+2.67%) sector was the best performer while Technology (-2.24%) was the weakest.

Index* Closing Price 9/15/2023 Percentage Change for Week Ending 9/15/2023 Year-to-Date Percentage Change Through 9/15/2023
Dow 34618.24 +0.12% +4.44%
S&P 500 4450.32 -0.16% +15.91%
NASDAQ 13708.33 -0.39% +30.97%

*See below for Index Definitions

MARKET OBSERVATIONS: 9/11/23  – 9/15/23

The major market indices finished the week mixed to lower, with the S&P 500 falling for a second straight week, as a batch of economic data pointed to tamer core inflation and a resilient US consumer was pitted against growing expectations that the Fed will need to hold rates at elevated levels for the foreseeable future. On the inflation front, the Labor Department reported that the headline Consumer Price Index (CPI) climbed 3.7 percent in the year through August, faster than the 3.2 percent July reading, and slightly higher than the 3.6 percent advance that forecasters had expected. However, after removing food and energy costs, the core price index climbed 4.3 percent from a year ago down from 4.7 percent in July and the lowest level since September 2021. The Federal Reserve closely monitors the core rate of inflation because it is considered a better measure of future inflation. According to an article from WSJ ‘Fed Whisper’ Nick Timiraos that followed the release of the CPI data, the monthly core reading likely keeps Federal Reserve officials on course to hold interest rates steady at their upcoming meeting week without resolving a bigger debate over whether they will need to raise them again this year to slow the economy and maintain recent progress on inflation. The market is currently undecided on what they Fed will do at the remaining two meetings of the year (November & December) with the CME FedWatch tool suggesting there is about a coin toss chance that the Fed will keep rate hikes on hold at the meetings.

In other economic news, retail sales rose 0.6 percent in August, the fifth straight monthly gain and well ahead of the 0.1 percent advance expected by economists. However, the so-called control group of retail sales that excludes auto dealers, gas stations and building materials and feeds into the gross domestic product increased just 0.1 percent, after a revised 0.7 percent increase in July. Initial jobless claims for state unemployment benefits climbed to a seasonally adjusted 220K for the week ended Sept. 9 from 217K the week prior. Meanwhile, core producer prices rose 2.2 percent in August from a year earlier, down from a 2.4 percent yearly increase in July and the lowest annualized pace since early-2021. Elsewhere, US housing affordability remained at record lows in July as high mortgage rates and prices kept home ownership out of reach for many Americans. The National Association of Realtors housing affordability index was unchanged at 87.8 in July, matching the lowest level in data back to 1989. A level of 100 means a family with the median income has enough income to qualify for a mortgage at the median home price.

The Week Ahead: The focal point of the coming week will be the two-day FOMC meeting on Tuesday and Wednesday. The Fed is widely expected to leave their benchmark rate unchanged at a range of 5.25–5.5%. Investors are also expected to keenly focus on the updated Summary of Economic Projections that will accompany the decision, with future rate hike and inflation expectations on the radar screen. The so-called “dot plot” is likely to show the Fed penciling in one more rate hike before year end, giving them the optionality of making a move if the forward data warrants. At the after-meeting press conference, Fed Chair Powell is expected to deliver a similar message to what he said at the Jackson Hole meeting, stressing that additional hikes would be conditional on a reacceleration in job gains or underlying wage or price inflation. Economic reports of interest this week include August New Home Sales, Existing Home Sales during August, and the S&P Manufacturing PMI for September. It will be another quiet week on the earnings front with just five members of the S&P 500 scheduled to release results. The unofficial kick-off to third quarter earnings season will begin in earnest the week of October 16.

— By Michael Schwager, Chief Market Strategist, Managing Director


The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Wilshire 5000 Total Market IndexSM represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.

Standard and Poor's 500© Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.

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