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Weekly Economic Update: June 21st, 2022

June 21st, 2022

Weekly Market Update

In this week’s recap: Fed rate hike triggers market dip.

The Week on Wall Street

Stocks moved lower last week as recession fears deepened following a Fed hike in interest rates and weak economic data.

The Dow Jones Industrial Average fell 4.79%, while the Standard & Poor’s 500 dropped 5.79%. The Nasdaq Composite index slid 4.78% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 4.51%.^1,2,3

Stocks Tumble

Stocks were under pressure all week due to inflation worries, higher yields, and rising recession concerns. In advance of the much-awaited mid-week meeting of the Federal Open Market Committee (FOMC), bond yields jumped, and stocks retreated on speculation that the Fed might raise rates by 75 basis points. When the Fed announced a 75 basis point hike on Wednesday, stocks rebounded strongly.

The enthusiasm was short-lived. Stocks resumed their slide on Thursday as global central banks followed with their own rate hikes. Recession fears grew based on a weak housing starts report and a contraction in the Philadelphia Fed Business Index–the first contraction since May 2020.⁴

Fed Rate Hike

The Federal Reserve announced a 0.75% hike in the federal funds rate, making it the biggest rate increase since 1994 and signaling its commitment to address inflation. The report from last week’s FOMC meeting also indicated new rate projections, showing that all members expect rates to rise to at least 3.0% by year-end, with half the members expecting rates to rise to 3.375%.⁵

The 75 basis point rate increase was a late-developing change from earlier Fed guidance of a 50 basis point increase. The change of heart was in response to recent inflation data and rising inflationary expectations.⁶

Tip of the Week

Take a look at your insurance policy and read the fine print about progressive illness in case you or a loved one are one day diagnosed with Alzheimer’s Disease, Parkinson’s Disease, or other forms of neurological disease.

Radio

Time Change! Retire Ready with David Nicholas will now be airing on Saturdays at 6:00 PM on 95.5 WSB. Be sure to tune in this weekend! If you missed this past weekend's show, CLICK HERE to listen!

Media

Be sure to subscribe to our YouTube page for all of David’s media commentaries CLICK HERE!

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Potential recession-proof stocks: Colgate, Ulta, Alphabet, Microsoft, Coca-Cola

Watch David Nicholas' Fox Business segment with Stuart Varney on 6/21 to find out why!

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