The Dow Jones Industrial had been rolling right along this summer.
From its lows on June 17 (first day of summer: June 21) at 29,888 to a short-term peak of 34,152 on Aug. 16, the Dow had rallied about 14% as traders dialed back expectations on a faster pace of rate hikes from the Federal Reserve. Economic data from jobs to retail sales, meanwhile, didn’t paint a picture of an economy tipping into a recession.
Sprinkle on signs of peak inflation, and the Dow was on a hot streak.
And then Fed chief Jerome Powell recommitted to stomping out inflation on Aug. 26, promising to do whatever it takes to bring price levels throughout the economy down. Investors took Powell’s tough talk as interest rates are headed higher well into 2023.
The Dow cratered more than 1,000 points on Friday, slashing its gains this summer to 5.7%.
“The equity markets should prepare to be disappointed by Jerome Powell’s speech,” Comerica Wealth Management chief investment officer John Lynch wrote in a note to…