A bit of a recovery from last week’s sell off, but the market is still sideways at a high level. The market sold off about 2% last week, much less than people might realize if you watch the news. The S&P 500’s 50 Day Moving average held… again, at 4433. This looks to be the 8th or 9th time it has held in the last 10 months. This is a sign of it’s strength. Someday the 50 Day Moving Average will break and we’ll see the market take a bigger dip, but for now, it seems to be holding. Any significant break below this 50 Day Moving Average could see the market drop more moderately to the next level of support at 4233. All normal stuff.
Market moving news this week included August inflation that came in at 0.3% which was lower than the 0.4% expected. Additionally this down from the 0.5% reported for July and is the lowest number reported since January. This translates into 5.3% year over year inflation over the last 12 months, again lower than the expected 5.4%. While it is still too early to call it a trend, it was nice to see inflation slow a bit. 5.3% inflation is still slightly elevated, leaving the debate open as to whether this inflation is transitory (meaning temporary) or not. This begs the question: will lower inflation numbers, reduce the Federal Reserve’s desire to taper bond purchases and further extend how long they keep interest rates low. Again, it’s still too early to tell, but market participants are grasping at anything they can to gauge the market and economy.
Further, we still have the Delta variant keeping us confused, and new info out of China this week added to the fray as regulators there attempt to rein in private industries.
House Democrats outlined new details for potential tax increases, including a better-than-feared 26.5% corporate tax rate (originally proposed at 28%) and a 3% surtax on individuals making more than $5 million. You almost could hear a sigh of relief in the markets, and this could explain some of the recovery in stock prices.
I’ve attached Michael Gibbs’ weekly piece.
MichaelGibbsWeekly9.16.2021.pdf
It’s starting to feel like fall this week, we don’t know if we’re happy or sad about it.
Have a nice weekend: DeHaven, Michael, Janet, Mariah and Tamara.