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The stock market once again experienced a volatile week. The major market indexes finished down again, mainly due to the Federal Reserve and interest rates. The Dow Jones Industrial Average was down for its sixth straight week, and the Nasdaq recorded its fifth straight weekly loss for the first time since 2012.

The markets started the week flat, waiting for the Fed rate hike announcement, and then it became a roller coaster ride. On Wednesday, the Federal Reserve announced the much-anticipated 50 basis point increase. What was surprising was the stock market rally after the announcement.

After the Fed made its announcement on Wednesday, the Dow Jones Industrial Average gained 932 points or 2.81 percent, its best day since November 9, 2020. The S&P 500 gained 2.99 percent, and the Nasdaq was up by 3.19 percent by the end of the day.

For the day, all 11 S&P 500 sectors were positive, with energy as the best performing sector. Financials also did well, with Bank of America and Wells Fargo up about 4 percent. Tech stocks also participated in the rally, with Apple up 3 percent and Meta Platforms up 5 percent.

Federal Reserve Chairman Jerome Powell had quite a bit to say during his press conference, which had a lot to do with the stock market rally. The markets liked it when he said the Fed has ruled out any larger rate hikes, and there will be no 75 basis point increases. However, he said to expect another one or two additional 50 basis point increases to fight inflation.

Powell also added that the economy is still strong thanks to consumers with money to propel the economy and solid corporate balance sheets. He also hinted that the worst of the sharp rises we’ve seen in inflation could be ready to ease up.

To wrap up the announcement, Chairman Powell stated that the Fed has a good chance of restoring stable prices without causing a significant increase in unemployment or a sharp slowdown in the economy.

Fed funds futures are now pricing in a 52 basis point hike at the June meeting, which is down from 61 bases points before the announcement. The futures market is now expecting a fed funds rate of 2.80 percent by the end of this year, which is down from 2.96 percent.

The market gave back all of Wednesday’s gain on Thursday when the 10-year Treasury yield jumped above 3 percent for the first time since 2018. That triggered a major pullback in all major market indexes, with all of Wednesday’s gains gone by noon on Thursday.

By the end of trading on Thursday, the Dow Jones Industrial Average dropped 1,120 points or 3.3 percent, the S&P 500 lost 3.7 percent, and the Nasdaq Composite Index fell 5.2 percent. One Wall Street strategist believes that the rally on Wednesday were shorts rushing to cover.

The sell-off affected almost all stocks, with more than 90 percent of the stocks listed on the S&P 500 declining on the day. E-commerce stocks were especially hard hit when Etsy and eBay reported weaker than expected revenue guidance. Etsy lost 16.8 percent, eBay lost 11.7 percent, and Shopify dropped almost 15 percent for the day when they missed top and bottom-line estimates.

Tech stocks gave back all of Wednesday’s gains and more, with Amazon losing 7.6 percent, Meta Platforms dropping 6.8 percent, Microsoft falling 4.4 percent, and Apple losing 5.6 percent.

For the year, the Dow Jones Industrial Average is down 9.5 percent, the S&P 500 is down by 13.5 percent, and the Nasdaq composite has now lost 22.4 percent.

The yield on the 10-year Treasury finished the week at 3.13 percent, which is up 1.6 percent for the year. To date, bonds are down 10 percent.

In other economic news last week, employers added 428,000 jobs in April, slightly above expectations, and wages rose 5.5 percent on a year-over-year basis. Oddly, fewer people were participating in the labor force, with 62.2 percent of the population working, down 0.2 percent from March.

It is believed that the resurgence in Covid could be a factor in this, and economists aren’t yet worried that this is a trend. According to the Bureau of Labor Statistics, there were as many as 1.2 million people out of the workforce in April due to illness.

Inflation is still the top concern for the Fed. The war in Ukraine continues to cause shortages of fertilizer, which will affect crops and food prices. China has imposed more lockdowns because of increasing Covid-19 cases in the country, which is leading to continuing supply problems.

This week, the Consumer Price Index will be released on Wednesday and is expected to come in a little below the March figure of 8.5 percent. If so, this could be a good signal that inflation has peaked.

Mortgage rates continued their upward climb as they hit the highest level since 2009 at 5.27 percent, up 17 basis points from the previous week.

The stock market had another negative week to finish the month. Markets are facing concerns from inflation, a tightening Federal Reserve, rising interest rates, the continuing war in Ukraine and increasing Covid cases in China. Corporate earnings also weighed on stocks.

The Nasdaq had the worst of it, falling 13.3 percent for April, making it the worst month since 2008. The Nasdaq fell almost 4.2 percent on Friday, mainly because of Amazon and other large tech companies.

On Friday, the S&P 500 dropped 3.6 percent, and the Dow Jones Industrial Average dropped 939 points, or 2.8 percent. The Nasdaq and S&P 500 finished the day at new lows for 2022, taking out the previous low set in March.

For the month, the S&P 500 lost 8.8 percent, and the DJIA lost 4.9 percent. That was the worst month for the S&P 500 since March 2020 at the start of the pandemic.

The Nasdaq is now in a bear market, 23.9 percent lower than its intraday high. For the year, the S&P 500 is off its record high by 14.3 percent, and the DJIA is 10.8 percent lower.

On Thursday, the major market indexes rallied, mainly because of a good earnings report from Meta Platforms. The Nasdaq jumped 3.1 percent, the DJIA gained 1.9 percent, and the S&P 500 added 2.5 percent. Unfortunately, it wasn’t enough to keep the markets from tanking on Friday or saving the month.

Amazon fell 14 percent on Friday after it reported a loss of $7.6 billion on its investment in Rivian, the electric vehicle maker, and issued weak revenues for the second quarter. They are now projecting earnings of between $116 billion to $121, less than the expected $125.5 billion. The 14 percent loss on Friday was the largest drop for Amazon since July 2006.

Amazon wasn’t the only tech stock to drop because of negative news on Friday. Intel lost 6.9 percent when they reported weak guidance for the fiscal quarter, and Apple fell 3.7 percent when the company stated that supply chain problems could hinder revenue for the fiscal third quarter.

Even with the backdrop of inflation worries and the tightening Fed, about 80 percent of the S&P 500 companies reporting to date have beat quarterly earnings expectations, with 50 percent of the companies reporting so far.

The gross domestic product came in with a surprising decline of 1.4 percent for the first quarter. It was surprising because this reversal is quite abrupt, considering the last GDP report was the best number since 1984.

The estimate had the GDP coming in with a 1 percent gain for the quarter. The market basically shrugged off this number since the decline is attributed to factors that should reverse later this year. It is still believed that the U.S. will avoid a recession and the next GDP report should give us better guidance.

One reason that the report did not garner much concern was that consumer spending remains strong. Consumer spending accounts for almost 70 percent of the U.S. economy and is still growing at a solid pace.

Personal consumer spending sped up slightly from 2.5 percent previously to 2.7 percent. For comparison, consumer spending grew at an average of 2.3 percent during the past decade. As we move further away from the pandemic, consumer spending has shifted from the purchase of goods and moved more towards services like travel, dining out and concerts.

There are signs that inflation is beginning to flatten, or at least not continue to rise at the record pace that it has been. Consumer spending rose faster than inflation for the third month in a row. This can also slow inflation since services rise slower in price than they do for goods.

Another sign inflation is starting to flatten is that core prices, excluding food and energy, rose 5.2 percent in March from the previous year. That was below the year-over-year increase of 5.3 percent in February, the first decline since February 2021.

Housing prices continued their upward pace, increasing 19.8 percent in February year-over-year. Sun Belt cities like Miami, Tampa, and Phoenix saw home price increases ranging from 29.7 percent in Miami to 32.9 percent in Phoenix.

According to Zillow, the average 30-year fixed mortgage is at 4.89 percent, down 10 basis points for the week. But other places are showing the average rate for a 30-year fixed mortgage as high as 5.12 percent.

Adjustable-rate mortgages (ARMs) have recently become more popular as interest rates rise. The rate for a 5/1 adjustable-rate mortgage is 4.38 percent. A 5/1 ARM means that the rate is fixed for five years, and the 1 means that it will readjust once every year for the remaining life of the loan. The risk with an ARM is if interest rates are considerably higher when the loan adjusts after five years and the interest on the loan jumps higher.