S&P 500 Loses Ground This Week Ahead Of Fed Interest Rate Decision: What Investors Need To Know

Zinger Key Points
  • Analysts have lowered their earnings estimates for S&P 500 companies for the fourth quarter by 5.6% since the end of September.
  • Key economic updates in the week ahead include the November CPI and Wednesday Fed interest rate decision.

The S&P 500 traded lower in its worst week since September on renewed concerns over inflation and interest rates.

On Friday, the U.S. Labor Department reported a 7.4% increase in the producer price index in the month of November, down from peak growth of 11.7% in March but above economist estimates of a 7.2% gain. 

Federal Reserve Chair Jerome Powell recently said the central bank could begin moderating the pace of its interest rate hikes "as soon as the December meeting," but the Fed will likely continue to tighten monetary policy in its ongoing battle with inflation.

On Thursday, the U.S. Federal Trade Commission voted three-to-one in favor of a complaint to block a $68.7-billion acquisition of video game publisher

Activision Blizzard Inc ATVI by software giant Microsoft Corp MSFT.

Microsoft has insisted the buyout would not limit competition in the gaming space, but the FTC's antitrust case will now go before the commission's internal administrative law judge.

The United Auto Workers announced on Friday that employees at an Ohio electric vehicle battery plant co-owned by General Motors Company GM and LG Energy Solution voted 710-16 in favor of joining the UAW. Wages at the Ultium plant currently range from $15 to $22 per hour, below the roughly $30 per hour UAW workers earn at many U.S. factories.

On Thursday, the Pentagon announced it is splitting a six-year, $9-billion cloud computing contract four ways and awarding it to Amazon.com, Inc. AMZN, Microsoft, Oracle Corporation ORCL and Alphabet Inc GOOGL GOOG subsidiary Google.

The U.S. Department of Defense initially awarded the contract exclusively to Microsoft back in 2018, but the deal was abandoned after Amazon alleged the Trump administration interfered with the decision-making process.

Smith & Wesson Misfires: Smith & Wesson Brands Inc SWBI shares dropped more than 21% this week after the firearm manufacturer said falling gun demand triggered a 47% drop in revenue in the third quarter.

In the week ahead, third-quarter earnings season continues with reports from Oracle on Monday, Lennar Corp LEN, Trip.com Group Ltd TCOM on Wednesday and Adobe Inc ADBE on Thursday.

Analysts have lowered their earnings estimates for S&P 500 companies for the fourth quarter by 5.6% since the end of September, according to FactSet.

Economic Numbers: Following the hot PPI reading, investors will get more key economic updates on Tuesday when the U.S. Labor Department releases its November Consumer Price Index reading and on Wednesday when the Federal Reserve releases its latest interest rate decision and accompanying commentary.

Photo via Shutterstock. 

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