A turbulent week on Wall Street ends with a “Thank Goolsbee, it’s Friday” rally, after the Chicago Fed President used a CNBC appearance to refocus investors’ attention on the still-encouraging trend in inflation and the likelihood that interest rates still have room to be trimmed in the context of a healthy economy.
Friday’s 1.1% relief bounce in the S&P 500 also owed plenty to the tame PCE inflation reading that morning, not to mention the preconditions of a rather washed-out stock market following three weeks of oppressive sub-surface selling pressure.
Neither Austan Goolsbee’s predictably soothing words nor the Friday index rebound were enough to offset fully the quicksilver repricing of Federal Reserve’s rate-setting path for next year, nor the 3% dump in the S&P 500 on Wednesday that followed the Fed’s decision and outlook release.
Yet in a few respects, a bit of wobbly action in the indexes, surge in volatility and reversals in some of the more overheated assets were overdue and probably necessary to test the bull market against higher bond yields and a more-foggy policy horizon. And who’s to say the testing process is complete?
Source: https://www.cnbc.com/2024/12/21/bull-market-tested-as-volatility-spikes-overheated-assets-cool-off-the-testing-may-not-be-done.html