Historic S&P 500 Comeback Runs Out Of Steam: What Are The Market Catalysts Ahead?

The SPDR S&P 500 ETF Trust SPY made new 2022 lows this week, but staged a historic intraday recovery following another disappointing batch of inflation data.

On Thursday, the U.S. Labor Department reported the consumer price index gained 8.2% in September, exceeding economist estimates of 8.1%. Core CPI inflation, which excludes volatile food and energy prices, was up 6.6% compared to economist estimates of 6.5%.

The S&P 500 initially dropped more than 2% to new 52-week lows and the Nasdaq Composite fell as much as 3.2% on Thursday morning before the market mounted a historic comeback, with both indexes finishing the day higher by more than 2%.

Thursday marked the S&P 500's fifth-largest intraday reversal and the Nasdaq's fourth-largest intraday reversal in history.

On Wednesday, the Federal Open Market Committee reiterated its commitment to be as aggressive as necessary with its monetary policy tightening in its ongoing efforts to bring down inflation. In the minutes from its September meeting, FOMC members said it would likely be appropriate to maintain peak interest rates "for some time" until they see "compelling evidence" inflation is headed back to 2%.

Semiconductor stocks, including ON Semiconductor Corp ON and Lam Research Corporation LRCX, traded sharply lower this week after the U.S. Department of Commerce announced a new set of rules restricting the sale of advanced computing semiconductors to China.

The new rules aimed at protecting U.S. national security and foreign policy interests also require foreign companies to apply for a license to use American tools to produce certain high-end chips sold to China.

Money In The Bank: JPMorgan Chase & Co JPM shares traded higher by more than 2% on Friday after the big bank reported a third-quarter earnings beat driven by 34% net interest income growth.

In the week ahead, third-quarter earnings season ramps up with quarterly reports from Bank of America Corp BAC on Monday, Tesla Inc TSLA on Wednesday, AT&T Inc. T on Thursday and Verizon Communications Inc. VZ on Friday.

Half of S&P 500 companies that have already reported third-quarter earnings have mentioned unfavorable foreign exchange rates on their earnings calls, according to FactSet.

Economic Numbers: Following the disappointing CPI reading, investors will get more key economic updates on Wednesday when the U.S. Census Bureau releases its September Housing Starts report and on Thursday when the People's Bank of China announces its latest interest rate decision.

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