The week it paid off to fight the Fed

Another positive but volatile week with the market surge driven by the daytime session.? The S&P 500 was up 1.66% as the market took in economic news that made it question the Fed’s announcements around further rate hikes.? Small cap stocks, as measured by the Russell 2000, were up even more (at 3.94%) fueled by the daytime session.

Monday - Equity markets fell to start the week as investors grew anxious about Wednesday’s Fed meeting and rate decision. The S&P 500 fell 1.2% and Russell 2000 dropped 1.3% driven by declines in both the overnight and daytime sessions.

Tuesday - Stocks opened higher on Tuesday and further rallied during the day on strong data on growth and inflation from Europe and manufacturing and services data from China. Increased confidence that interest rates are close to the ultimate level sent stocks higher with the S&P 500 posting a 1.5% gain and the Russell 2000 posting a 2.44% for the day.

Wednesday - Stocks opened lower but rallied strongly during the Powell press conference, latching on to his less rigid and combative tone.? Like with Tuesday, Wednesday’s gains were over 1.00 percent in both large and small caps, further fueling the rally.

Thursday? - Markets opened positive and continued upward during the course of the day as Meta and others released positive earning news and bond yields fell despite Powell’s comments that the Fed might continue raising rates.

Friday -? Tensions between a strong labor market report and a capital market betting on lower inflation came to head on Friday.? Markets were very volatile following a staggering jobs report showing 517,000 new jobs created, more than twice as many forecasted.? Markets sold off by open, bounced higher during the day and then sold off again toward the close with the S&P falling 1.04% and the Russell falling 0.78%.???

Next Week - Whereas mid-week the story was that the markets did not believe what Jerome Powell was peddling, the jobs report gives investors pause.? Maybe now instead of investors vs. the Fed, it is more investors and the Fed vs the data. More earnings to come and lots of opinions as to whether this rally will continue or reverse.? Don’t forget we get to hear more from Powell on Tuesday.