WEKLY SUMMARY: Stocks, Bonds, & Oil Battered Ahead Of Fed
Stocks gave back much of the previous two weeks’ gains, as some surprisingly strong economic data (ISM services, Michigan Consumer Sentiment, PPI) dampened hopes that the Fed might soon be able to curb its program of raising interest rates to cool inflation. The S&P 500 Index recorded its worst return in five weeks and was unable to stay above its 200-day moving average following the recent rally. Within the S&P 500, defensive sectors (health care, consumer staples, and utilities) fared best. Energy shares fell sharply as oil prices tumbled to their lowest level since January. The yield on the 10-year U.S. Treasury note touched a nearly three-month intraday low on Wednesday but edged higher to end the week. In Europe, stocks (STOXX 600 Index) fell -1% on renewed fears of a recession as central banks tighten monetary policy in an effort to quell inflation. Revised data showed that the eurozone economy expanded 0.3% sequentially in Q3 —up from a first estimate of 0.2%—boosted by increases in household spending and business investment. Eurozone retail sales in October posted their biggest monthly drop this year, while German industrial production weakened that month, albeit less than expected. Chinese stock markets rose as Beijing’s rapid easing of coronavirus pandemic restrictions bolstered investor sentiment. The dollar ended the week higher while cryptocurrencies were broadly unchanged with Bitcoin trading slightly above $17k.