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The S&P 500 was up over 3% on Wednesday after Powell implied smaller rate hikes can come as early as December. We saw a strong jobs report and higher than expected wage growth which drove the market lower at the open on Friday, followed by rally back up, leading the index to close above the 200-day moving average.
The S&P 500 ended the shortened holiday week up 1.5% and closed above 4000 for the first time since September, while the Nasdaq still sits below the key 12,000 level.
October saw most global financial assets rebound, following weak performance in the prior two months. The market responded positively to soft economic data such as downward revisions to global growth and weakening manufacturing PMIs, as a sign that tightening policies are effective and central banks could pause on hikes sooner.
The lower-than-expected PPI data drove the S&P 500 above 4000, before James Bullard’s comments pushed rates higher and the U.S market lower.
The U.S. market broke with its positive trend after an FOMC message that was more hawkish than expected. In addition, the latest labour data confirmed that the U.S. job market continues to be strong.
The U.S market resumed its trend from last Friday, climbing over 2.5% in the first two trading days as 10yr yields continued to retreat from the highs and back towards 4.0%.
The stock market had another negative week, erasing last week’s gains. On Thursday, the market briefly rallied due to technical factors, but this was not enough to overcome the inflationary pressures pushing the Fed to continue its hawkish policy.
After ups and downs, the U.S markets still ended their week in the green, following three weeks of negative performance.
The month of August was a tale of two halves, as easing price pressures provided support to equities in the first two weeks, but the market lost steam mid-month as hawkish central bank messages caused fears of a recession to reemerge.