The broader market fell a day after stocks retreated as stronger-than-expected economic data raised concerns about the Fed’s ability to rein in inflation. The Fed is doing this by deliberately slowing the economy with higher interest rates.
Investors are closely watching economic data and company announcements to better understand how the economy is coping with stubborn inflation. They are also trying to determine whether inflation is slowing at a rate that would allow the Fed to ease off rate hikes. Fed policy could put too much brakes on the economy and push it into recession.
The Federal Reserve meets next week and is expected to raise interest rates by 0.5 basis points. It has raised its benchmark interest rate six times since March, bringing it to a range of 3.75% to 4%, the highest level in 15 years. Wall Street expects the benchmark rate to peak in a range of 5% to 5.25% in mid-2023.
Wall Street will get its weekly update on jobless claims on Thursday. The job market has been one of the strongest areas of the economy.
Investors will get an important update later this week on inflation and how consumers are responding to high prices.
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On Friday, the government is to release its producer price report for November. This will give investors greater insight into how inflation affects businesses.
The University of Michigan will release its consumer sentiment survey for December on Friday.
Fitch Ratings has downgraded its forecast for world economic growth to reflect rate hikes by the Federal Reserve and other central banks amid mounting recession fears.
The rating agency’s Global Economic Outlook report estimated global economic growth of 1.4% in 2023, down from its September forecast of 1.7%. It expects U.S. growth to slow to 0.2% in 2023 from 0.5% as the pace of monetary policy tightening picks up.
Associated Press
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