Stock market news

Volatility returned and global equities pulled back on Friday, finishing lower for the week. The prospect of higher interest rates as central banks start normalizing policy and the fast-spreading omicron virus variant both weighed on sentiment. Consistent with the cautious market undertone, cyclical sectors underperformed, government bonds rose, and the 10-year yield fell to 1.4%.

All eyes were on the Fed last week as the market awaited the latest policy decision and outlook – a decision that drew particular attention given the inflation environment. To its credit, the Fed brought no major surprises. As expected, it announced it will wind down bond purchases at a faster rate, acknowledging the elevated consumer price pressures that have persisted through the back half of the year. It did, however, convey a slightly more hawkish tone, which included an outlook for potentially three rate hikes next year. In a market that has become accustomed to – if not dependent upon – extraordinarily easy monetary policy settings, it was the initial positive reaction in stocks to this tone that was perhaps the surprise in the week.

The Quarterly Market Outlook offers our perspective on recent activity in the capital markets. The Edward Jones Investment Policy Committee offers its viewpoints on the U.S. economy, stocks, the bond market, international markets and asset classes, as well as a special topic of interest to investors each quarter.

These aren’t short-term predictions. Rather, this is Edward Jones’ perspective on market and economic topics, designed to help you make decisions affecting your long-term financial strategy. As you read through each topic, you'll find specific actions you can discuss with your financial advisor.