Unexpectedly Intriguing!
22 August 2022

The S&P 500 (Index: SPX) mostly drifted sideways during the third week of August 2022, before dipping on Friday, 19 August 2022 to close the week at 4,228.48.

Here's how that change looks on the latest update to the dividend futures-based model's alterative futures forecast chart:

Alternative Futures - S&P 500 - 2022Q3 - Standard Model (m=-2.5 from 16 June 2021) - Snapshot on 19 Aug 2022

The week held little in the way of market moving news, with the next big event that might move the market's coming when the members of the Federal Reserve meet at their annual retreat in Jackson Hole, Wyoming. The dividend futures-based model indicates investors' main quarter of interest continues to be 2023-Q1. However, we can't help but note that whatever news comes out of Jackson Hole in the upcoming week will present investors with an opportunity to shift their focus to the much nearer term time horizon without greatly affecting the level of stock prices.

As for the week that was, the small dip in the index' level was associated with "recession jitters" in the week's market-moving headlines from Friday, 19 August 2022:

Monday, 15 August 2022
Tuesday, 16 August 2022
Wednesday, 17 August 2022
Thursday, 18 August 2022
Friday, 19 August 2022

There was little change in the CME Group's FedWatch Tool's projections of the Fed's future interest rate hikes to follow last week’s action. Investors still expect half point rate hikes in September 2022 (2022-Q3) and November (2022-Q4), followed by a quarter point rate hike in December (2022-Q4), with rates topping out in a target range of 3.50-3.75%. The probability of a rate cut is elevated from June 2023 onward but is below 50%.

The Atlanta Fed's GDPNow tool's forecast for real GDP growth in 2022-Q3 dropped to 1.6%, down from last week's projection of 2.5% growth.

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