The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short. — Victor Sperandeo

1. Banc of California Agrees to Buy PacWest as Regional Lenders Seek Strength Together — Banc of California in a move by the lenders to further shore themselves up following a regional-banking crisis earlier this year. Warburg Pincus and Centerbridge plan to invest a total of $400 million in newly issued equity, giving them about a 19% stake in the combined business. The private-equity firms, each with a history of investing in financial companies, will provide the only external source of funding for the acquisition.
2. Federal Reserve Raises Interest Rates to 22-Year High — the Federal Reserve resumed lifting interest rates Wednesday with a quarter-percentage-point increase that will bring them to a 22-year high. The unanimous decision to raise the benchmark federal-funds rate to a range between 5.25% and 5.5% ended a brief pause in rate increases last month as officials debate whether they have done enough to combat inflation. It is the 11th increase since March 2022, when they lifted rates from near zero. At a news conference after the meeting, Fed Chair Jerome Powell didn’t rule out another rate rise at the central bank’s next meeting, but he emphasized how much the central bank had already done and the amount of time it can take for monetary policy to cool inflation.
3. GDP grew at a 2.4% pace in the second quarter, topping expectations despite recession calls — GDP, the sum of all goods and services activity, increased at a 2.4% annualized rate for the April-through-June period, better than the 2% consensus estimate from Dow Jones. GDP rose at a 2% pace in the first quarter. Consumer spending powered the solid quarter, aided by increases in nonresidential fixed investment, government spending and inventory growth. inflation was held in check through the period. The personal consumption expenditures price index increased 2.6%, down from a 4.1% rise in the first quarter and well below the Dow Jones estimate for a gain of 3.2%.
4. Inflation and Wage Growth Ease as Fed Considers Next Move — the personal-consumption expenditures price index, the Fed’s preferred inflation measure, rose 3% in June from a year earlier, the Commerce Department said separately Friday, down from a 3.8% rise the prior month. Employers spent 4.5% more on wages and benefits in April to June from a year earlier, the Labor Department said Friday. That marked a slowing from a 4.8% increase the prior quarter. The employment-cost index, a measure of compensation growth closely watched by Fed officials, also posted its smallest quarterly increase in two years.

Here is a summary of the stock market last week:

The S&P 500 rose 0.7% for the week, closing at 3,899.38.
The Dow Jones Industrial Average rose 0.3%, closing at 31,384.55.
The Nasdaq Composite rose 1.3%, closing at 11,635.31.
The VIX volatility index fell 11.3%, closing at 22.05.
The market was largely positive last week, with all three major indexes closing higher. The S&P 500 and Nasdaq Composite both closed at their highest levels since June 13. The Dow Jones Industrial Average also closed at its highest level since June 8.

There were a few factors that contributed to the positive market sentiment last week. First, investors were encouraged by the strong earnings reports that were released. Second, there was some relief that the Federal Reserve was not planning to raise interest rates as aggressively as some had feared. Third, there was some optimism that the economy was starting to slow down, which could help to ease inflation.

The week ahead — Economic data from Econoday.com:

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