Weekly Economic Update: June 14, 2023

Presented by Nicholas Wealth Management

The bull is back for the S&P 500 Last week was a quiet one for trading, and markets seemed to be holding their breath in the days leading up to this week’s Federal Reserve meeting. Although it wasn’t a stellar performance week, the S&P 500 reached a notable milestone: The index hit 20% up from October lows, bringing it back into bull territory. Is it a strong bull or a skittish one? Whether it sticks around is largely reliant upon what happens with interest rates this week. Last week, the Labor Department reported that weekly jobless claims jumped to 261,000, the highest level since October 2021 and a sign the red-hot jobs market may be cooling. But continuing claims fell unexpectedly and hit their lowest level in nearly four months. Data released on Tuesday showed the service sector is experiencing a decline in prices. Plus, the latest consumer price index (CPI) and producer price index (PPI) numbers were released this week. The CPI (the major indicator for inflation) came in at 4%, down from 4.9% in April. Lower prices in the services sector, plus lowering CPI/PPI, helped push the Fed’s decision to the side of keeping rates where they are, although a 4% inflation rate is still double the Fed’s target rate of 2%. Analysts are closely examining Fed Chair Jerome Powell’s post-meeting remarks on Wednesday for a hint that future hikes may still be on the table. If they are — or if the Fed unexpectedly raises rates again this month — those 20% highs in the S&P 500 may be short-lived. Coming this week

• Other data this week will come out mostly on Thursday and will include U.S. retail sales, import prices and business inventories. Weekly initial jobless claims, which have been on the rise, will also be released Thursday.
• Just a reminder that markets will have a three-day weekend, as Wall Street is closed on June 19 for Juneteenth.

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