The 2023 stock market rally took a breather in August as investors consider whether or not the latest batch of economic data will force the Federal Reserve to issue at least one more interest rate hike before the end of the year.
Stocks Sell Off
Stocks declined sharply following the Federal Open Market Committee (FOMC) announcement and continued to fall the following day as bond yields spiked. The 10-year Treasury yield hit 4.48% on Thursday, touching its highest point in more than 15 years.1
Stocks also reacted to news that the House of Representatives went into recess on Thursday, increasing the prospect of a government shutdown. The sell-off cooled on Friday, adding only incrementally to the week’s accumulated losses.
Fed Signals Rate Hike
In their economic projections, 12 of 19 Fed officials expect to raise rates once more this year. (The FOMC meets October 31-November 1 and again in December.) The Fed also lowered their unemployment projection from their June estimate and revised their projection for annual core inflation to 3.7% in the fourth quarter, down from June’s 3.9% forecast.2
Stay Prepared, Mitigate Your Risk
September is National Preparedness Month, which reminds us to update our financial plans and stay in communication with key family members. As we enter into the first month of fourth quarter, this – for lack of a better word random holiday is a reminder to stay prepared, which is more than just a choice, but a responsibility. A little thoughtful preparation and family communication may be necessary to keep yourself and your loved ones safe during unexpected situations.
- CNBC, September 21, 2023
2. The Wall Street Journal, September 23, 2023