Your Evening Briefing: A Gruesome Year for the Stock Market

At times this week, not even a crystal ball could have foretold which way the stock market would go. Red-hot consumer prices? Stocks weirdly rallied, adding 5% in a flash. But in the end, the direction was all too predictable: down. A sky full of inflationary clouds blotted out any moments of bullish sunlight. As has been true all year, the week turned on a Friday, with concerns that price pressures are getting entrenched leaving the S&P 500 down 1.6% over five days, bringing losses on the year to a crushing 25%. Violent reversals point up the challenge of assessing what investors might do when obsessions with inflation data and the Fed fuel unpredictable reactions. “We have to realize that this is going to stick around a little bit longer,” said Brian Belski, chief investment strategist at BMO. “But I do believe a year from now stocks will be higher, and I think a year from now inflation will be lower.”

An escalating public dispute between the Biden administration and Saudi Arabia over the latter’s oil production cuts may risk irreparable harm to US relations with the kingdom. Dueling statements from Washington and Riyadh in recent days over the OPEC+ decision to cut flows underscore how badly the US-Saudi relationship has deteriorated.