Stock Market Enters Busy Week with Rising Odds of Fed Rate Hike

The stock market is heading into a busy week, with investors watching how stocks react after a week of mixed signals. The Dow Jones Industrial Average and S&P 500 each gained about 0.5% for the week, while the Nasdaq Composite rose 0.85%. However, this hides some weakness under the surface, as many sectors fell during the week.

The Russell 2000 was a major weak spot, dropping 1.5% for the week, with almost all of the decline coming on Friday. It also fell below its 50-day moving average for the first time in about a month.

Microsoft led the group of 'Magnificent Seven' stocks that rose during the week, while Tesla was the only exception. The broader market was not as strong as the S&P 500 suggested, with the Invesco S&P 500 Equal Weight ETF falling 0.4% for the week.

Fed chief Kevin Warsh's speech at Jackson Hole changed the Fed rate outlook, strengthening his credibility on inflation but also increasing concerns that the Fed could raise interest rates. The odds of a Fed rate hike jumped to around 58% from about 35% on Thursday.