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It’s a bumpy, volatile, no good, very bad market out there. Stocks, bonds, commodities, currencies, and futures have been moving violently from day to day—and there’s probably more whiplash ahead

The

S&P 500
index fell to a three-month low this week, down 4.6%. Growth stocks were hardest hit as the

Nasdaq Composite
slid 5.1%. The

Dow Jones Industrial Average
finished the week down 4.0%—its lowest close of 2022 and on the cusp of a bear market, down 19.6% from its all-time high.

Big moves weren’t exclusive to the equity market. The Federal Reserve’s interest-rate hike on Wednesday, and its hawkish projections, sent the two-year Treasury note yield to a fresh 15-year high, at 4.21%, as prices tumbled. Oil hit its lowest level since January on Friday, at $78.74 per barrel, reflecting concerns about the global economy.

Currency markets were also jolted. The

U.S. Dollar Index
finished the week up 3%, boosted by the Fed’s actions. On Thursday, the Japanese yen soared 2% versus the dollar—a massive one-day move for a major currency—after the country’s Ministry of Finance said it would intervene to support the yen for the first time since 1998. Currency strategists called the planned intervention a short-term fix, at best.

Not to be outdone, the British pound dropped 3.5% versus the dollar on Friday, to a 37-year low below $1.09. The decline came after the newly installed United Kingdom government unveiled its economic plan, featuring both higher spending and tax cuts, and requiring more borrowing and bond issuance.

It’s hard to see the chaos ending soon. The coming week brings little in the way of market-moving news—the personal consumption expenditures price index will be the economic-data highlight, along with earnings from

Nike

(ticker: NKE) and

Micron Technology

(MU)—before a six-week period with perhaps too much.

The first two weeks of October will bring September jobs and inflation reports; then third-quarter earnings season will ramp up. Management commentary on the future will be key. The first week of November includes a Fed meeting and the October employment numbers; then the midterm elections and October inflation figures arrive the following week.

Making it all the more difficult: The futures market is still fighting the Fed, pricing in a peak federal-funds rate in early 2023 and cuts by the end of that year. That’s in contrast to the officials’ stated plans to pause and wait for tighter policy to have an effect. In other words, there’s room for market pricing to get incrementally more hawkish and for yields to rise further.

A drop below the S&P 500’s June low of 3,667 points might be in the cards. Several European and Asian indexes broke through the bottom of their 2022 trading ranges this past week. And it’s likely to be a bumpy road: October historically has seen the most 1% one-day gains or losses in the S&P 500 of any month, according to Bespoke Investment Group, followed by November.

December could be better. It’s a seasonally strong month for the market, and if monthly inflation readings come down by the end of the year, there shouldn’t be any more hawkish surprises from the Fed. Stocks also tend to do worse the year before a recession than they do once the downturn arrives, which means the market could start rallying, even as the economic pain ramps up.

Don’t look too far ahead, however. We have to get through what’s coming first.

Write to Nicholas Jasinski at [email protected]