October 14, 2022

Weekly Market Commentary October 10th to October 14th 2022

The release of the Consumer Price Index was the biggest market mover of the week, as all inflation readings came in hotter than expected. CPI month-over-month was at 0.4% while year-over-year was 8.3%. When stripping out food and energy, Core CPI was 6.6%, the highest since 1982. Food and shelter costs rose 0.8% and 0.7%, respectively during the month. Markets tumbled on the news but quickly recovered shortly after the open in a volatile session with major swings in both directions.

The Producer Price Index showed a 0.4% increase on the month and an 8.5% increase year-over-year. Both results came in above expectations, indicating that inflationary pressures felt by companies are persisting and only moderating slowly.

Retail Sales stalled on the month with a 0.0% reading, under the 0.2% expectation. 7 of the 13 retail categories fell on the month, including auto dealers, furniture outlets, sporting goods stores, and electronics merchants. Retail Sales Ex-Autos rose 0.1%, higher than the -0.1% expectation. The data suggests consumers are feeling a bigger pinch from pricing pressures; however it is unknown how much hurricane Ian played a part in suppressing consumption.

Jobless Claims rose by 9,000 to 228,000, surpassing expectations and reaching a six-week high. A significant factor to the increase was Florida claims post hurricane Ian, as many homes and business across the region were destroyed.

Lastly, Mortgage applications fell 2.0% this week following a 14.2% drop the week prior, a third straight weekly decline as mortgage rates in the U.S. moved to a 16-year high of 6.9%.

CPI volatility sent the markets on a rollercoaster ride this week as we saw some of the highest volume since the summer. The S&P 500 finished 1.6% lower at 3,583, while the Dow Jones Industrial Average closed 1.2% higher at 29,635. The Nasdaq had the biggest change of the week finishing 3.1% lower at 10,321. The 10-Year U.S. Treasury closed the week at 4.02%, the first close above 4% since October of 2008. Likewise, the 2-Year yield finished at 4.5%, the highest close since June of 2007.

Next week is light on economic data, with housing data accounting for the bulk of the releases.

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