Last week both the Nasdaq and the S&P 500 suffered their worst weekly declines in almost two months, putting investor optimism to the test.
Real Money contributor Stephen Guilfoyle took a look at the markets in his daily column this morning.
"U.S. equities have been strong, at least until last week, while bonds have more or less shown weakness. That much is true. Does this add doubt to the 2023 equity market rally that has largely been driven by a belief that the Federal Reserve bank will be forced to ease policy earlier than they themselves project due to economic weakness? I think maybe it does, though this story is still to be told," he wrote.
While the Fed remains in focus for investors, especially after comments from Fed presidents and Chair Jerome Powell last week, the focus this week will be the consumer price index print.
“The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector,” Powell said last week. “But it has a long way to go. These are the very early stages of disinflation.”
So now Wall Street will look to the economic data to back up Powell's comments though CME's FedWatch tool has investors banking on a 90% chance of the Fed hiking by another 25 basis points next month.
