Stocks closed lower Friday to end the first trading week of May, which was particularly volatile amid the Federal Reserve's half point rate hike announcement and investor skittishness. The Dow Jones dropped for its sixth straight week, and losses marked a losing week for all three major averages despite starting off with three straight positive sessions. Meanwhile, the April jobs report showed that the economy added 428,000 jobs while unemployment held steady at 3.6%. Melissa Armo, Founder and Owner of The Stock Swoosh, joins Closing Bell to discuss Friday's close, why investors are shrugging off April's positive jobs report, the Federal Reserve's rate hike strategy, and more. 

Closing Bell

Stocks Close Lower to End Volatile First Week of Trading in May

stocks extending losses and closing lower to end the first trading week of May joining us now is melissa, r mo founder and owner of the stock swoosh melissa, It's been a roller coaster of a week. Why are stocks continuing to lose ground into the weekend? One of the reasons were selling off and the major reason that we've been selling off is because of high inflation and now the Fed is going to increase interest rates, which is, which of course is going to slow down economic growth. So I think it's a problem for markets and I think that Powell has lost a lot of momentum now from people, people just don't trust what he says, that they're going to stay on this course and be able to lower the levels of inflation and that's why you saw the market flip from Wednesday's rally into thursday's selloff. And now of course we're ending the week down even more now, stocks largely in the red today, as you noticed by a stellar april jobs report showing a gain of 420,000 jobs. So why do you think markets just Shawn did this off because they're worried about higher interest rates, they're worried about a recession, they're worried about inflation, they're worried about Russia Ukraine, there's so many things in the forefront that could affect markets and unfortunately none of them are positive. What would have been a positive thing, A positive thing would have been if, for example, we had any good earnings in tech, all of the earnings, that major earnings that would have affected the market, all the banks, amazon netflix, google all of those were down even once in a good reports, forecasted problems in the future with the slowing economy. So that's the problem. When interest rates rise. It hurts not only the consumer, it hurts businesses as well because borrowing costs are up and then they have to raise prices. And again, if they don't sell as many products and they don't make as much money which affects the bottom line of profits of these large corporations. And what is the market made up of? The market is made up of companies? The SPP is 500 stocks. So I mean again, it's all companies and so that's what's happening right now and again, the market I think has much, much, much, much for them to go lower and we, we tried to recover today. It failed. It was a week rally. I wouldn't be surprised if we were down on monday morning. Ouch. Alright, so the Federal Reserve announced Wednesday it would raise rates by half a point stock soared. Remember what, what, what, what have they erased those gains and more? Why is that? Well, when we erase the games because again jerome Powell has lost credibility because they were wrong for the last two years on the inflation. Remember going back 2020 to 2021 when prices went up and there were supply chain issues, we still have those issues and there they there he's basically saying, hey, if we raise rates, we will prevent a recession. But that doesn't stop the supply chain issues and it doesn't stop the fact that we have too much stimulus and too low rates for too long that we have so much free money going around. One of the problems with the report today and one of the reasons why it was a mixed reaction is even though we had increased increased job numbers, we had low levels of participation. There's too many people that are not working that numbers like 60% or something it was this morning. So there's not enough people working. And if you're a consumer, you go out, you go shopping, you try to call something, you're on hold for two hours. You know, there's really not enough people back to work in the labor force. Again, with all this stimulus. I think it's created a problem with productivity. But getting back to what we were saying about inflation, that the markets worried about it because again, raising rates and raising taxes, It is a problem. And to do all of this in a time right now where we have the backdrop of the Russia Ukraine situation. It's, it's really not a good situation going into the summer. I wouldn't be surprised if the market doesn't even make a new high the rest of the year in 2022 and that will be shocking for a lot of people that are invested and are used to the market making multiple new highs, we don't have enough people back at work. And that's a big problem. And again, it's also a problem as far as raising rates is gonna mean prices go up. So it's gonna slow down economic activity. That's not going to solve the problem of getting people back to work. So it's enough. Again, I don't think, I don't, if they did it, if they did a point, if they did 0.0.75 basis points, I don't think that's gonna create, I don't think that's gonna stop a recession and I don't think it's going to curb inflation because the Fed is late. That's what I was saying. I think, I think Jerome Powell has lost credibility here because they've been wrong all along the way. And so now it's almost like too late. Like even if they raise rates too much too fast, which it sounds like they're gonna do, it's gonna create a worse problem where we're gonna be in a in a recession, but we're gonna have inflated prices and we're gonna go into recession anyways. I'm not so sure if we can stop going into recession and then we have again, low labor participation. I think that people just need to get, I heard you talk about the cereal, I think people need to to either, you know, understand that things are going to cost more and budget for that and account for that are maybe change their spending right now where they're buying different products to lower lower grade products, because I don't think that things are gonna change and people that live paycheck to paycheck are going to need to budget that accordingly. Alright, Melissa, armor, founder and owner of the stock swoosh Melissa have a great weekend and thank you for being on the show.