The S&P 500 Index declined 3.00% last week marking the third worst week in 2022. The index has dropped -13.99% over the last seven straight weeks of losses, a losing streak not seen since March 2001 when the index declined eight consecutive weeks. The index is currently down 17.67% for the year. Equities have been under pressure as markets digest concerns over Fed monetary policy, future rate hikes, war in Ukraine, COVID in China, and increasing fears of recession as the Fed battles inflation.
Federal Reserve Chairman Jerome Powell said last week that “Restoring price stability is an unconditional need. It is something we have to do,” and he needs to “see inflation coming down in a convincing way” before the Fed stops raising interest rates. Kansas City Fed President Esther George echoed those sentiments, saying the recent selling in equity markets will not dissuade the Fed from using half-point interest-rate hikes to bring down inflation. Economic data released last week showed mortgage applications fell 10.6% in April compared to the prior year and 14% from March as the recent climb in mortgage rates weighed on demand. In the most recent sign of a tight labor market, continuing claims, or the number of people receiving unemployment benefits, were 1.3 million as of May 7, which was the lowest level since 1969.
