Market Update 09/05/22

Jason Chen

Markets remained uncertain from Aug. 30 to Sept. 2 as the Federal Reserve doubled down to fight inflation, supply chain issues and global conflicts.

Continuing the previous week’s losses, the majors ended August on a four-day losing streak, but saw a reverse on Sept. 1. The markets closed with the Dow Jones Industrial Average rising 0.46% and the S&P 500 rising 0.3%, but the Nasdaq composite fell 0.26%.

Friday saw more losses, as the Dow and S&P 500 fell 1.07% and the Nasdaq fell 1.31%. The domestic markets were closed on Monday for Labor Day.

The energy sector is volatile currently as the G-7 nations plan to impose a price cap on oil. G-7 nations hope to use their influence to limit Russia’s revenue as the war in Ukraine persists. The plan capped the price of Russian oil on the global markets, which Russia sees as a reason to impose sanctions.

The G-7 hopes that Russia will choose to sell its oil at a reduced price as opposed to the alternative, which is to sell less oil, potentially affecting its long-term production capacity. This price cap would also be used to combat inflation, which is at its highest levels in decades.

“This price cap is one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States and globally from future price spikes caused by global disruptions,” U.S. Treasury Secretary Janet Yellen said in a press release.

Investors should be wary of home goods retailer Bed Bath & Beyond Inc., as it has become a “meme stock” in previous weeks, fueled by short sellers. Investors who think it is an easy way to gain profit should consider the fundamentals and news when making a decision.

Bed Bath & Beyond is currently in distress as it fights $1.3 billion in long-term debt. This caused some suppliers to pause shipments to the company, after they already delayed payments. The business is also without a sufficient cash balance as it battles a $722 million deficit from the past year.

Overall, investors should be hopeful about the economy’s health, with U.S. Labor Secretary Marty Walsh remaining optimistic about the August jobs report and the Fed’s actions to combat inflation.

Critics, however, warn of a coming recession due to the Fed’s determination to fight record-high inflation. Investors should be careful.