November 28 2022

Equities Rise on Slowdown of Fed Rate Hikes

Equity markets rose during the shortened Thanksgiving trading week. Global equities (represented by the MSCI All Country World Index) were up 1.51%, and domestic stocks (represented by the S&P 500 Index) were up 1.56%.

Meeting minutes from the US Federal Reserve’s latest policy meeting earlier in November encouraged investors as a “substantial majority of participants” believed slowing the pace of interest rate hikes “would likely soon be appropriate”. The Fed raised interest rates for the last 4 meetings by 0.75% each, leading to the highest level of the fed funds rate in over a decade. Target fed funds rate projections were adjusted following the release of the meeting minutes with higher fed funds rate targets decreasing in probability and lower ranges increasing.

Weekly initial claims for unemployment insurance rose last week to 240,000, up from the previous week of 223,000. While still at relatively low levels, claims have increased from 190,000 at the end of September and now rising toward year-highs of 261,000 from mid-July.

This week the release of the Personal Consumption Expenditures Price Index from the US Bureau of Economic Analysis and a labor market update from the US Bureau of Labor Statistics will give more insight into the effects of the Fed’s rate hikes on inflation and the strength of the labor market.

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.

Mike Horwath

Mike heads the internal Investment Committee that is responsible for the investment direction of the firm. He works closely with Diversified’s financial planners to support the investment side of the lifelong financial planning process. Lastly, it’s Mike’s responsibility to oversee the ever-changing global investment landscape and work with the planners to evaluate the impact on each of our client’s strategies.

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Equities Rise on Slowdown of Fed Rate Hikes