Interest Rate Hikes Will Continue Until Inflation Comes Down
The S&P 500 snapped a four-week winning streak this week, with the Federal Reserve’s latest comment suggesting investors can expect aggressive interest rate hikes to continue.
On Wednesday, the Fed released minutes since its policy-making meeting in July which revealed that the central bank is ready to continue raising interest rates until inflation comes down significantly. The bond market is anticipating another rate hike of at least 0.5% in September.
On Thursday, GameStop Chairman Ryan Cohen’s RC Ventures revealed in a filing that he had offloaded his entire stake in the so-called Bed Bath & Beyond meme stock. Shares of Bed Bath & Beyond had soared more than 350% in the past month, but fell 37% on Friday after news of Cohen’s exit.
On Thursday, the National Association of Realtors announced sales of existing homes in the United States fell 20.2% year-over-year in July. The national average mortgage rate on a 30-year fixed loan is around 5.5%, down from 3% at the start of the year.
Berkshire Hathaway filed its quarterly 13F form on Monday disclosing every investment move its legendary CEO, Warren Buffett, made in the second quarter. Buffett added large stakes in Occidental Petroleum, Chevron and Apple, cut investments in General Motors and Kroger and exited a position in Verizon Communications.
Shares of athletic shoe retailer Foot Locker traded up more than 21% on Friday after the company reported a second-quarter profit boost and announced a new CEO.
In the coming week, the second quarter earnings season will continue with reports from Macy’s and XPeng on Tuesday, Nvidia on Wednesday and Peloton Interactive on Thursday.
Excluding the energy sector, S&P 500 earnings are down 4% year-on-year in the second quarter, according to to FactSet.
In the week ahead, investors will receive key economic updates on Monday when the People’s Bank of China announces its latest interest rate decision and on Friday when Federal Reserve Chairman Jerome Powell delivers remarks at the Jackson Hole Symposium.
Benzinga is a financial information and data company headquartered in Detroit.