"The problem with that is it's a 'heads I win, tails you lose,'" said Art Hogan, chief investment strategist at National Securities. August housing starts are Tuesday and existing home sales are Wednesday, and the data is expected to show slowing as mortgage rates rose. Now it's not." Fed ahead In the week ahead, there are just a few data releases, but they will provide an important window into how the housing market has been coping with the Fed's rate hiking cycle. "The bond market had been competing for capital with both hands tied behind its back. "When you can get 4% yield in the front end of the yield curve that's an attractive alternative," said Jack Ablin, chief investment officer at Cresset Capital. That accelerated the wild ride higher in shorter duration Treasury yields, which pulled funds to fixed income investments as investors jumped on yield levels not seen since 2007. After the CPI, markets shifted to price in an even more aggressive Fed rate hiking path. A multi-day rally came to an abrupt halt, and the Dow lost 1,276 points, or almost 4%, in the worst stock market day since June, 2020. The stock market's tone soured dramatically after Tuesday's release of the consumer price index, which showed inflation to be hotter and more pervasive than expected in August. Stocks were sharply lower on the week, with the S & P 500 ending at 3,873, a decline of 4.8% and its worst week since June.
FedEx rattled the market after it withdrew its full year earnings guidance Thursday, warning about global softness in its delivery business. The central bank's two-day meeting Tuesday and Wednesday comes in a week where investors will also be on high alert for more guidance about corporate earnings ahead of the next reporting season in October. The Federal Reserve is expected to raise interest rates by another three-quarters of a point Wednesday, but it is what it signals about future rate hikes that will drive markets.
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