1 focus on Wall Street since consumer inflation drives interest rates, the Fed’s policy response, and the secondary effect on markets and the economy. While one month’s data isn’t likely to significantly move the needle, he says this report is the No. Schassler will be watching “the more sticky forms of inflation,” such as food and shelter prices, in the next CPI report. 13, while the Fed’s preferred measure of inflation-the personal consumption expenditures ( PCE) price index-will be released on Oct.
The September CPI report is scheduled for release on Oct. Their surprise was pretty clear: The day the August CPI data dropped, the S&P 500 tumbled 4.5%, its worst single-session decline since June 2020.Īccording to Cliff Hodge, chief investment officer for Cornerstone Wealth, investors can expect similar volatility surrounding the release of monthly inflation readings in October, “Inflation continues to be top of mind,” he says. Many market participants convinced themselves that price gains had already leveled off. September’s market performance was a wake-up call for many investors, particularly when the August consumer price index ( CPI) report showed that inflation had not peaked. 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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