Latest Fed Comments Stir Up Market Volatility:
Stocks dropped last week as investors directed their attention toward “what’s next” for interest rates, following a series of conflicting statements from Federal Reserve officials.
Fed Officials Weigh In
Stocks struggled out of the gate again last week, ending Monday and Tuesday in the red on concerns that recent economic data could derail the Fed’s plan for short-term rates.
The markets recovered Wednesday through Thursday morning when weekly jobless claims were better than expected. But stocks fell broadly Thursday afternoon following mixed comments from multiple Fed officials. All three averages ended the day down more than 1% for the first time in a month.1,2
On Friday, a strong jobs report gave investors much-needed confidence. The U.S. economy created 303,000 jobs in March—higher than economists’ expectations—while unemployment dropped slightly to 3.8 percent. Markets rallied after the news, but not enough to recoup all weekly losses.3
Source: Charles Schwab & Co., Inc
What’s the Scoop?
Several Fed officials made speeches last week, including Chair Jerome Powell. In a Wednesday speech at Stanford University, Powell said it was a “bumpy” path to a soft landing, but Fed officials are continuing to look at the long-term trends.4
Last week, Atlanta Fed President Raphael Bostic suggested one cut. San Francisco Fed President Mary Daly noted no guarantees, and Cleveland’s President Loretta Mester said rate cuts may come later this year. Minneapolis President Neel Kashkari rattled markets by suggesting that no cuts may be on the table, followed by Fed Governor Michelle Bowman, who said on Friday that it’s possible rates may have to move higher to control inflation.5,6
The flurry of comments comes following the end of the Fed’s blackout period. Fed officials are not allowed to make public comments except for very narrow windows during the year.
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
At Concord Asset Management, we design portfolios for the long run, with the ability to navigate various market cycles. However, you can have confidence that we are monitoring these market-moving events, and we will make reasonable, tactical adjustments as necessary.
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1The Wall Street Journal, April 5, 2024
2The Wall Street Journal, April 4, 2024
3The Wall Street Journal, April 5, 2024
4CNBC.com, April 3, 2024
5CNBC.com, April 5, 2024
6CNBC.com, April 5, 2024
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