Market Wrap-Up for September 18: The Week in Review

This past week can only be summed up with two words: Federal Reserve. No matter what else was going on this week, it was all about the Federal Reserve and the drama around its session to raise or not raise key interest rates. The overall market was basically aimless as investors and traders tried to pinpoint exactly what was going on inside the heads of Janet Yellen and the other Federal Reserve governors.

Ultimately, the Fed proved to shock many economists, analysts and traders/investors on its decision not to raise rates.

Potentially, that decision came from the other pieces of economic data released this week. Consumer retail numbers, core inflationary numbers, home starts and key manufacturing index data were all released this week and the results were just so-so.

As were the few earnings reports released. However, despite the poor results from several key names, the effects were quite muted as the Federal Reserve still was everyone’s primary concern.

Despite lower trading volumes due to the Rosh Hashanah holiday, stocks opened the week down as concerns from Asia and Europe took center stage. Disappointing data reported from China could mean that the nation won’t reach its full-year growth target of 7%. That sent stocks sliding across the globe. The Dow Jones Industrial Average shed 62.13 points to reach 16,370.96, while the S&P 500 declined 8.02 points to hit 1,953.03.

Luckily, there wasn’t any more bad news since there was zero economic data released.

• Business development company Full Circle Capital Corp. (FULL) reported Q4 earnings of 11 cents per share. That was in line with the analyst estimates. FULL offers loans and debt to various middle-market companies and yields 13.42%.

While Monday brought no news, Tuesday brought several pieces of economic data. To start with were retail sales. Both core and regular retail sales came in at declines, showing that the U.S. consumer was becoming more cautious with their spending. The Census Bureau data showed that core retail sales, which includes automobiles, slipped 0.1%, while regular retail sales sank 0.2%. That was below analyst forecasts for gains. Meanwhile, the Federal Reserve Bank of New York also reported its Empire State Manufacturing Index. The measure of business activity in New York also showed a 14.6% decline, well below the 0.5% gain expected by economists.

But bad news turned out to be good news as traders assumed that the Fed would hold off on raising interest rates. The Dow Jones Industrial Average rallied, surging 228.89 points to reach its highest close since August 28. The S&P 500 gained 1.3% and the tech-heavy NASDAQ Composite rose 1.1%.

There were no divided-related earnings to report.

Wednesday was all about inflationary data and represented the last piece of the Federal Reserve’s interest rate puzzle. The Bureau of Labor Statistics reported both Consumer Price Index (CPI) and Core CPI data before the market opened. Thanks to declines in energy prices, the CPI actually showed deflation as the change in the price of goods and services purchased by consumers dipped by 0.1%. Core CPI, which backs energy out, showed a slight rise of 0.1%. Those metrics were in line with analyst predictions. Further, the Energy Information Administration (EIA) reported a drop in crude oil inventories.

Stocks took the inflation news in stride, hoping that the poor inflationary picture would cause the Fed to hold off on rate increases. The Dow Jones Industrial Average jumped 140.10 points and saw 29 of its 30 components close higher. The NASDAQ rose 28.72 points and the S&P 500 gained 17.22 to hit within striking distance of the critical 2,000 level.

• Logistics and freight giant FedEx (FDX ) reported a disappointing outlook and profit numbers. The Dow Transports Index component reported earnings per share of $2.42. That number, while still a profit, was below analyst estimates of $2.45. FDX yields 0.70%.

• Like one of its healthy portions, Cracker Barrel Old Country Store, Inc. (CRBL) reported earnings that topped analyst projections by 11 cents. Driven by increasing comps, CRBL reported earnings of $1.97. The operator of country-styled restaurants yields 3%.

• Billionaire and Oracle Corporation CEO (ORCL ) Larry Ellison was smiling when the enterprise software giant reported a slight beat on its earnings. ORCL managed to report 53 cents versus an analyst-estimated 52 cents. ORCL yields 1.6%.

What the last few weeks of volatility were predicting was finally here. It was time for the Fed to shine. And it chose to do nothing. The Federal Reserve left key benchmark interest rates at zero. At first the markets cheered the decision, with the Dow surging up 193 points.

However, the Fed’s conference had a very sour tone. The key phrasing was that the Fed was “monitoring developments abroad.” Ultimately, the Fed wove a story about how the economy, both at home and internationally, wasn’t exactly doing very well. Several cracks had begun to form and these were the reason why the central bank kept interest rates unchanged. Basically, the economy isn’t strong enough to withstand higher interest rates.

That made investors nervous. The Dow Jones Industrial Average reversed gains and finished the day losing 65.21 points to reach 16,674.74. Likewise, the S&P 500 declined 5.11 points. However, the NASDAQ managed to hold onto some of its gains and finish marginally up.

There were no dividend-related earnings to report as all eyes were glued to the Fed’s decision.

This Friday brings us the Conference Board’s Leading Index. The reading has a muted effect on the stock markets as all the data contained in the index has already been distributed. Investors may as well throw the data out as Janet Yellen’s conference told us everything we need to know in the short run: things aren’t as rosy as they seem.

With that in mind, Friday’s trading should continue to be a dicey one. DWO futures are indicating to a higher 38-point opening. However, given how fast things turned during the conference, investors should expect volatility.

There are no dividend-related earnings to report this Friday.

Going into next week, investors should get a break on the economic data. It won’t be until the tail end when we see some “real” information. These include durable goods orders, home sales, and unemployment claims. Then all eyes will be on the Bureau of Economic Analysis as it reports GDP data. That number could be send the markets tanking if it isn’t too great.

On the earnings front we’ll see reports from cereal maker General Mills (GIS ), restaurateur Darden (DRI ), and uniform supplier Cintas Corp. (CTAS ).

All in all, investors should expect another wild week.