What a difference a good CPI print can make! Markets celebrated Thursday morning's release of the Consumer Price Index data for October. Headline CPI rose 0.4% in October, which was less than consensus expectations for a 0.6% increase, which plots CPI at 7.7% year-over-year.

Markets initially rallied on Wednesday after the Fed statement indicated it might slow down its pace of rate increases, only to reverse after some hawkish comments in the press conference. As expected, the committee raised rates by 75 bps.

Last week was a tale of two markets, with gains for the DJIA putting it on track for its best October ever with its fourth positive week in a row, while mega-cap tech names took a beating reminiscent of the dot-com bust of the early 2000s.

Stocks regained some upward momentum last week, as investors reacted positively to earnings reports and hints that the Fed might moderate its pace of interest rate increases. The S&P 500 experienced its largest weekly gain in four months, while the DJIA posted its third consecutive week of gains.

As third-quarter earnings season gets underway, markets were mostly lower last week as investors digested the latest inflation data and its implications for Fed policy. Defensive sectors like healthcare and consumer staples outperformed, while consumer discretionary and communication services lagged, dragged down by names like Amazon, Meta, and Tesla.

The S&P 500 Index fell its third consecutive quarter for the first time since the global financial crisis more than a decade ago. Last year the Fed believed that inflation was “transitory”, but that has proven not to be the case.

For the first time in four weeks, stocks ended higher but gave back early week gains as Friday's jobs data was deemed "too strong" to satisfy a hawkish Fed. Energy was the standout sector performer this week, as OPEC decided to cut global production.

Turmoil in UK financial markets and lack of confidence in hawkish Fed actions sent stocks to their third consecutive weekly decline for the first time since 2009. The S&P 500 Index broke below its mid-June lows, retreating to November 2020 levels. And the 10-year Treasury breached 4% for the first time since 2008.

A hawkish Fed, led by head hawk Jerome Powell, sent stocks into a brutal sell-off, and bond yields shot up sharply higher. The Dow Jones Industrial Average and S&P 400 Midcap Index fell to new intraday lows not seen since late 2020.

Thanks to a hotter-than-expected consumer price index (CPI) inflation print of 8.3%, stocks suffered their largest weekly drop in 3 months. The report dimmed investor hopes that the economy had moved beyond "peak inflation". Even more concerning was that core inflation (ex-food and energy) jumped to 6.3%, its highest level since March.