The S&P 500’s Touches a New High But Retreats as Inflation Prospects Dampen Investors’ Mood

After being beaten back by rising inflation concerns, the S&P 500 (Index: SPX) rebounded to reach a new record high closing value of 4,704.54 on Thursday, 18 November 2021, but retreated below that level to end the week at 4,697.96.

From the perspective of the alternative futures spaghetti forecast chart, the trajectory of the S&P 500 is riding just within the upper end of the redzone forecast range.

Alternative Futures - S&P 500 - 2021Q4 - Standard Model (m=-2.5 from 16 June 2021) - Snapshot on 19 Nov 2021

We suspect that investors are refocusing their forward-looking attention on 2022-Q2 since the Federal Reserve is now expected to initiate a new round of Federal Funds Rate hikes to address the persistent inflation that has developed since January 2021. The CME Group's FedWatch Tool is anticipating two, maybe three rate hikes in 2022 for the Federal Funds Rate set by the U.S. Federal Reserve. The FedWatch Tool predicts a greater than 50% probability for at least two quarter point rate hikes, the first in June 2022 and the second in September 2022, but is now giving just under a 50% probability of a third quarter point rate hike in December 2022.

Here are the market moving headlines from the third week of November 2021:

Monday, 15 November 2021
Tuesday, 16 November 2021
Wednesday, 17 November 2021
Thursday, 18 November 2021
Friday, 19 November 2021

We're shifting gears for the rest of the week with our annual week-long celebration of Thanksgiving, starting with a look at the inflation in the cost of a traditional Thanksgiving turkey dinner for 2021.