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It’s been a wild week.

On Wednesday, in a prepared speech, Federal Reserve Chair Jerome Powell suggested the Fed was likely to soon begin easing up on rate hikes, thanks to falling inflation.

Since lower rates are good for stocks, the market rejoiced. In one day, the S&P 500 jumped 3.1%, the Dow Jones Industrial Average rose 2.2% and the Nasdaq composite soared by 4.4%. European and Asian stocks followed suit, adding billions more in market value to shares worldwide.

Then, on Friday, the monthly employment report revealed the inflation fight isn’t over after all.

The hope was that job and wage growth would slow, further justifying lower interest rates. Instead, more jobs were created than expected and average hourly wages went up more than expected. Result? Rates rose, markets fell.

This inflation/recession/interest rate roller coaster has been happening for many months now. When there’s a hint of lower rates, stocks go up. When rates rise or recession raises its ugly head, stocks go down.

Until this tug of war is resolved, don’t expect lasting market moves in either direction.

As I said in my column of Nov. 11, “Beware the Recent Rally“:

“When it closed on Nov. 11, the S&P 500 was at 3,993 points. While the rally could continue for a while, I’m guessing the S&P won’t get much beyond 4,100 to 4,200.”

As I write this…

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