Last week's focus was on economic weakness, evident in two key areas: the revised first-quarter gross domestic product (GDP) figures and several bond auctions. Additionally, elevated inflation has persisted for over three years, with the last reading below 3% occurring in April 2021 (2.6%). While 3% may not seem significant, we experienced an annual inflation rate between 7% and 9.1% from December 2021 through November 2022, peaking at 9.1% in June 2022.

Markets started the week quietly before turmoil hit midweek due to strong jobs and manufacturing data, coupled with Fed minutes hinting at prolonged high rates, causing the Dow's worst day this year. Despite a modest recovery on Friday, uncertainty looms with upcoming PCE data potentially adding volatility and the 10-year Treasury yield stuck at 4.5%.

This week's market commentary highlights the contrasting forces at play. While stock markets hit new highs on hopes of inflation subsiding and potential rate cuts, inflation data remains stubbornly high. The Federal Reserve's response to inflation will be key in determining the market's future trajectory.

The month of September is historically a rough month for markets — and this year was no exception. Rising gas prices and high mortgage rates weighed on markets throughout the month. Then the prospect of a potential government shutdown pulled stocks down even further last week.

The Federal Reserve didn’t raise rates last week but left the door open for one more rate hike in the final two meetings of 2023. This was widely expected, but markets still didn’t like Chairman Jerome Powell’s comments in his post-meeting press conference.

Stocks closed lower last week, even as the latest data shows the U.S. is still doing well from an economic standpoint. Not a lot of new numbers were released, but the ones that were generally surprised on the upside.

Markets didn’t know which direction to go last week as they tried to decide which had more weight: the good news or the not-so-good news.