Still, October should provide valuable clues about the pace of growth and whether the Fed’s aggressive strategy will push the U.S. Raging inflation won’t be extinguished in October-and there’s no Fed meeting until November. “The market has failed to recognize the threat of inflation,” Schassler says. Market participants have been slow to catch up with the party line-and that’s reflected in the wild volatility, says David Schassler, head of quantitative investment solutions for VanEck. Then the Fed promised it would be “ transitory.” They segued to pitching a “soft landing” for the economy even as they hiked rates and now warning of more economic pain to come as they do whatever it takes to control inflation. Last year, Fed officials said inflation wouldn’t be a problem. But something has changed, and it largely boils down to perception.Ĭonsider how the Federal Reserve’s stance on inflation has evolved. Unsurprisingly, inflation remains the tail that wags the dog in markets. But these are hardly normal times for markets. Midway through the month, the S&P 500 plummeted more than 13% over the course of 10 days in a rout that might have felt shocking under more normal conditions. Nearly half of the trading days have seen the S&P 500 move higher or lower in excess of 1%, indicating a heightened level of volatility. The S&P 500 was firmly in bear market territory at the end of September, down nearly 24% on the year, the lowest level since November 2020.īy this point, investors have become accustomed to temporary bear market rallies that are followed by even more severe losses. stock market intensified in September, completely wiping out all of the S&P 500’s 2021 gains.
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