Stocks Down On Friday And For The Week, All Eyes On The Fed This Week  Image: Bigstock Stocks closed sharply lower on Friday and for the week. That makes it 5 weeks in a row for the Dow, and 4 weeks in a row for the S&P and the Nasdaq. The Nasdaq has gotten it the worst as it's down -23.2% (from their all-time high close to Friday's close), while the S&P and Dow are down -13.9% and -10.4% respectively. On Friday morning, the Personal Income and Outlays report showed the PCE Price Index (which stands for Personal Consumption Expenditures – and is the Fed's preferred inflation gauge), rose by 0.9% m/m (in line with expectations) and 6.6% y/y (just under the consensus for 6.8%). The Core PCE Index (which excludes food and energy) was up 0.3% m/m and 5.2% y/y. Even though those numbers were in line, or just under expectations, there was a hope that they would've fallen more than they did. Instead, they were essentially steady. And it was enough to spook already skittish investors out of the market ahead of Wednesday's FOMC Announcement, where the Fed is expected to raise rates by 50 basis points and begin unwinding their balance sheet. Quite frankly, I believe that is a bullish event, since that will help tamp down inflation, which is the biggest threat to the economy right now. But after Q1's negative GDP print of -1.4%, some people's uneasiness is growing. In other news, it was reported that the European Union is expected to approve a Russian oil ban this week. It's expected to be a phased in effort. There has been plenty of talk that this was coming. And the UK already announced their own plans to phase out their dependence on Russian energy by the end of the year. This could further disrupt the world energy market and exacerbate inflation. The market will be watching for the details of the EU plan and timeline. Earnings season is usually a bright spot. And it actually has been for many companies this earnings season. But some high profile misses, not the least of which was Amazon last week, which posted their first quarterly loss in 7 years and their slowest quarterly revenue growth in more than 20 years, sent shares down by -14% on Friday. Earnings season continues this week with another 1,807 companies set to report. And then another 1,499 next week. Stocks typically go up during earnings season. So far, that has not been the case for this one. But there's still several more weeks of earnings season left. We shall see. We have a full roster of economic reports out this week. But the main event will indeed be Wednesday's Fed announcement. Not just on their expected increase now, but any hint on what they are expected to do in June and July, since speculation has been swirling that they could go as high as 75 basis points at their next meeting (or meetings). In the meantime, traders will be watching to see if the market can regroup and put in a bottom. While there are definitely headwinds out there. There are also plenty of tailwinds. And it's hard to get too sour on the market, especially with one of the strongest labor markets on record, increased consumer demand, and increased business investment. Glad to put a lid on April. May is a brand new month. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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