Stocks Closed Lower Last Week, All Eyes On The Fed This Week  Image: Bigstock Stocks closed lower today and for the week. Last week's hotter than expected inflation reports -- both retail inflation (Consumer Price Index or CPI) and wholesale inflation (Producer Price Index or PPI), spooked the market ahead of this week's FOMC Announcement (Wednesday, 9/21), when the Fed will tell us how much they are increasing interest rates. While the CPI and PPI reports showed inflation remains below their summer highs, it's not by much. And inflation is still near 40-years highs. And that has some speculating that the Fed could raise interest rates even higher, and maintain them at that rate even longer than expected. At the moment, the midpoint for the Fed Funds rate is at 2.38%. If the Fed raises rates by 75 basis points, as expected, that would put the midpoint at 3.13%. But probably more important than how high they raise on Wednesday, is how high they intend to raise for the rest of the year, and next year. After the Fed makes their announcement on rates, Fed Chair, Jerome Powell, will hold his customary press conference where he will shed more light on the economy, the Fed's thought process, and answer questions. While it's unlikely he will say with any specificity how high they will raise again in November, everybody will be trying glean if the Fed has a new target rate in mind and a general timeframe for that to happen. Previously, the Fed has said they see the target rate getting to 3-3.5% by year's end, while other members recently said they see it getting above 4% by early next year. After this week's FOMC meeting, there's another one in November, then December, and then the first one in 2023 is February. All eyes and ears will be on the Fed this week. Adding to Friday's weakness was a warning from FedEx which saw shares drop by over -21%. Lower package volumes and a macroeconomic slowdown are expected to take it's toll on the carrier. They report earnings this week and are now expected to come in roughly -50% below what was previously expected. While lower deliveries are being felt by virtually all carriers, it's worth noting that one Stifel analyst thinks "a meaningful portion of FedEx's missteps here are company-specific," as he does not see how the aforementioned concerns by new FedEx CEO, Raj Subramaniam, "accounts for the entirety of this quarter's miss." We'll get another look at the economy today with the Housing Market Index. Then again on Tuesday with the Housing Starts and Permits report. And yet again on Wednesday with the MBA Mortgage Applications and Existing Home Sales reports. But the main event(s) this week will be Wednesday's Fed announcement, and the Fed Chair's press conference. In the meantime, the markets will try and regroup after last week's drop. All of the indexes still remain above their June lows. But they are also down double-digits from their all-time highs. What the Fed chooses to do and say on Wednesday could have a meaningful impact on the market's next move. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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