The S&P 500 Index completed its best performing week since November 2020, returning over 6% after two straight weeks of declines. Investors shrugged off the widely-anticipated rate hike after the Wednesday FOMC meeting as the war in Ukraine remains challenging but risk of global financial contagion appears minimal. A survey of FOMC members shows that the median prediction for the end of 2022 target rate has risen 100bps since the 12/15/2021 meeting. This week’s initial jobless claims of 214,000 show that United States maintains near full employment and inflation remains the larger problem for the Fed to tackle from its dual mandate. Many in the economic community believe that the U.S. economy has a strong enough foundation of fundamentals to withstand rising rates without spiraling into a recession.
The immediate reaction to an economic downturn is typically one of panic. You may have fears about losing your job, the rising costs of things,