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Investors Get Hit Hard This Week. Will They Stay Standing on Wednesday?

After this rough week, now all eyes are on the Fed rate decision.
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The market was hit with a one-two punch this week and finished with some of the worst action of the year. The Nasdaq 100 fell 5.8%, and the indexes undercut the lows that hit after Powell's Jackson Hole speech.

The week started with a much hotter than expected consumer price index report. Expectations were that the drop in gasoline and oil would drive down the number, but higher than expected food costs and rents more than offset the drop in energy. Market players were not positioned for this news, and the market suffered its worst day of the year as a result.

On Wednesday, there was a mild attempt at an oversold bounce, but it fizzled out as liquidation continued. On Thursday, the market was hit again by a surprisingly poor report from FedEx (FDX) . The CEO minced no words in these comments about how the global economy is slowing.

After these two negative events, the indexes and most stocks look extremely poor, but they have yet to test the lows that were hit in June.

This is an interesting setup as we head into the Fed interest rate decision, which will be announced on Wednesday afternoon. The chances of a three-quarter-point hike became a near certainty after the hot CPI report, but there is some talk that the hike could be a full point.

The bad news from FedEx is interesting, because it is a sign that the economic slowdown that the Fed is creating by hiking rates is already well underway. Market players will be looking for some comments on Wednesday from Fed Chair Jerome Powell that hints at how he is already seeing weakness which could temper future hikes.

Investors have been burned badly lately when they have anticipated even slight dovishness from the Fed, and the Fed is being very tough in its talk about how it is going to kill inflation. We will see where the indexes are on Wednesday when the Fed releases its decision. There should be some substantial volatility as the market digests the news.

This is an extremely tough market, but some great opportunities are developing. Have a good weekend. I'll see you on Monday.

At the time of publication, DePorre had no position in any security mentioned.