Indices Recover, McDonald’s Misses Expectations, Brent and Crude Oil Hit Multi-Year High

US indices had a better week despite the latest Fed announcement pointing to interest rate rises over the coming months. In addition to the rate rises, the announcement indicated that the money printing policy that’s been in place will gradually be reduced, it is expected that the tapering will lessen the inflationary pressures on the US economy.

Sadly, the week looks like a market bounce since the bigger picture for investors is that the S&P 500 is down 9.8% from its latest high and approaching correction territory. The Russell 2000 index of small-cap stocks has dropped to 1968.51, putting it around 20% below its previous high, indicating a bear market.

On Wednesday, the VIX, a gauge of predicted volatility, reached its highest level in a year. Concerns about central bank policy on interest rates and inflation, as well as geopolitical tensions over Russia, have shaken markets.

The most recent economic reports had some encouraging news. Last quarter, the economy increased at an annualized pace of 6.9%, the highest one-year increase since 1984.

Consumer spending, business investment, and efforts to restore inventories were expected to boost GDP to 5.5%. Separately, weekly jobless claims fell by 30,000, signaling a strong labor market.

The 10-year Treasury note yield decreased to 1.807% on Thursday, down from 1.845% the day before. Shorter-term government bonds have continued to fall in value, with the two-year Treasury yield climbing to 1.19%.

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