Stocks closed slightly higher Friday to end a volatile week marked by the Federal Reserve's 0.75% rate hike. However, the major indexes all shed points for the week, and the S&P 500 suffered its worst weekly loss since March 2020. Mark Luschini, Chief Investment Strategist at Janney Montgomery Scott, joins Closing Bell to discuss today's close, why he thinks markets are currently "very oversold," when the U.S. could possibly enter a recession, and more. 

Closing Bell

Stocks Close Slightly Higher, but Major Indexes Shed Points for the Week

turning back to the major averages. We know the S. And P. 500 weekly loss was the largest since March of 2020. That of course was the beginning of the pandemic and for the week of the S. And P. For the week? Smp fell 5.8% the dow lost 4.8%. The NASDAQ shed 4.7 to talk about all of it. Is Mark Luschini, chief investment strategist at Janney Montgomery scott. Mark, welcome your thoughts on today's close how markets ended the week after the Federal Reserve's rate hike this week, busy busy week for us on Wall Street. It certainly was um needless to say. I think from these levels we would have expected to see a rebound that had a little bit more energy associated with it than what we saw today. So I think today's action is a little bit disappointing how oversold the market is at this juncture, given the depths that the market has plunged, not just this week, but obviously on a year to date basis we're still down but 23% on the S. And P. 500. Even while the economy seems to be stitched together rather well, obviously, I think investors concerns have begun to shift from inflation to growth and the threat that's associated with the potential recession, which obviously go a long way to de rating the earnings picture that right now is quite stout on a year over year basis, but if the EEG is taken out of the PE then stocks could be marked down even further before we find a more durable bottom. I am curious, do you think this week's Fed rate hike was too aggressive or just aggressive enough? Quite frankly, I think it was a bit too aggressive. 75 basis points was something that jay Powell had mentioned in a previous press conference that wasn't even an under active discussion. So I think it was a bit ambitious, maybe perhaps even given away a little bit to politicizing the rate hike to show that they are being very firm in their efforts to try to tame inflation. But the concern that I have given the 75 basis points is that coupled with the fact that I think inflation may likely begin to recede somewhat from these, you know, obviously elevated levels out in the next couple of months or quarters, just organically let alone the pace of the economy right now, which is sluggish, I worry that it could go toward ending up awarding this economic expansion much sooner than it might otherwise have where they have taken more. If you will deliberate posture, I do want to ask you the question that's on everybody's mind or recession, is it possible? What do you think? I think it is uh wasn't too many weeks ago that I thought it was unlikely before the second half of 2023. But I mean if we look at the Atlanta Fed's GDP now, tracker, it's showing GDP growth here so far into the second quarter of 0.0% now, that's not particularly precise to the right of the decimal. But the point is, it's evidence of the fact that the economy is growing very slowly right now, so it would not take much more hesitation on the part of consumers to spend or even businesses to thwart the expansion. Therefore convert what seems to me to be a little momentum in the economy to maintain a positive growth right through the end of the year into the prospects of recession, not so much, perhaps this year, but earlier, next year. Another big question, when could inflation finally peak? Do you think we will finally see these high prices go away sometime this year? Well, certainly, I don't think we're going to see the 2% level that the Fed is trying to engineer us tour and I think they've even capitulated on that expectation. Having said that if you consider the two big components of inflation, one is goods pricing and the other services pricing start with the first one, goods pricing is coming down from a spike up into double digit uh year of year increases in prices to now, upper single digits still high but falling whereas services inflation is still rising but collectively coupled with the fact that businesses are starting to talk about perhaps not raising wages quite as aggressively as they did in the past unemployment, we're seeing by way weekly jobless claims from a very low level, starting to creep a little higher. I think that's all indicative of perhaps some of that upward bias to inflation is likely to recede, and we'll see that hopefully in the next couple of months. Thank you for the insight. Great context. Have a great weekend Mark, Mark Luschini, chief investment strategist at Janney Montgomery scott. We always appreciate it.