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Today in the Market (9/23/2022)

Good Evening. Fears that aggressive central bank tightening will precipitate a recession wreaked havoc on financial markets, sending U.S. stocks into a tailspin on Friday, capping a turbulent week of losses.

The S&P 500 index fell 1.72%, reaching a new low for 2022. The Dow Jones Industrial Average lost 1.26%, momentarily sliding into bear market territory during the trading day, and finishing at a 2022 low. Moreover, the Nasdaq Composite declined 1.80%.

EARNINGS ARE BACK

Thursday, Costco Wholesale (COST) reported fourth-quarter results that were above expectations and revenue in line with forecasts. Friday’s decline followed Thursday’s decline ahead of earnings.

  • Earnings Per Share: $4.20 vs. $4.17 expected
  • Revenue: $70.76 Billion vs. $70.80 Billion expected

According to analysts, Costco and other club retailers with membership models are often the last to raise prices and the first to drop them. This offers these enterprises a competitive advantage, but it also implies that membership costs will eventually climb.

However, With the majority of its profits coming from its membership model, Costco appears better positioned than discount competitors to maintain product prices low for consumers in the present context of high inflation. In addition, Costco members are better off than the average “cheap” purchaser. So, they have the means to continue shopping while seeking bargains.

RATES STILL GOING UP

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The Federal Reserve’s approach this week might have dire repercussions for Americans who have relied on credit cards to battle the rising cost of ordinary products or who have racked up debt to satisfy their pent-up desire for travel and recreation.

In the coming months, there is a strong possibility that the average rate will reach the record of 19% set in July 1991, according to Ted Rossman, the senior industry analyst at Bankrate.com. The majority of credit cardholders will soon confront rates that are three full percentage points higher than they were at the beginning of the year as a result of today’s increase.

Here’s where it gets more ugly. 60% of credit card debtors report owing their creditors for at least a year, up from 50% in 2021, according to a survey published this week by CreditCards.com.

How to fight it? Automating monthly payments for recurring expenses from your checking account and paying more than the minimum can help you stay on track. If you require additional assistance, a nonprofit credit counselor may be able to negotiate reduced interest rates with your credit card issuers for a fee.

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