Last updated: 18 Sep, 2021 | 11:35 am

US weekly: S&P 500 posts weekly loss as concerns around inflation weigh

US stocks started off the week on a strong note on Monday, ending a 5 day losing streak with energy companies leading the gains as crude oil jumped to a 6-week high. However, investors weighed potential corporate tax hikes and looked forward to important macro data over the upcoming days. 

US Indices ended lower on Tuesday, despite a better-than-anticipated inflation reading. Analysts are viewing the decline in growth in inflation as a signal that the Fed will not make an announcement related to tapering of asset purchases in the next week. 

The US indices rose on Wednesday due to mildly positive factory data and higher oil prices, although  fear of slowing economic recovery and higher corporate taxes kept weighing on investor sentiment. 

The Dow Jones Industrial Average and S&P 500 ended lower on Thursday in spite of strong retail sales data, as investors weighed the impact on inflation. Initial weekly jobless claims rose to 3,32,000 after falling to a pandemic-era low of 310,000.

On the final day of the week, US stocks ended the week modestly lower. While the week saw some strong economic data; supply chain challenges, elevated valuations, and concerns over an eventual tightening of monetary policy weighed on sentiment. The Dow Jones ended the week 0.1% lower, while the S&P 500 shed 0.6% in the week.

Weekly market stats with IND

Let’s see the major developments during the week

Bond yields increase as investors await Fed meeting: While the softer inflation data appeared to ease investors’ worries on interest rate hikes, the strong manufacturing and retail sales data, along with technical trading factors, contributed to higher yields in the week. Fed Reserve officials are expected to meet next. This should provide clarity on the outlook for tapering and interest rates.

Macro data provides conflicting signals: Investors witnessed a few significant data surprises during the week. Core inflation, while still quite high, eased to 4% last month, down from 4.5% in June. This is a welcome sign for the markets, as it's consistent with the Fed's stance that the surge in consumer prices will be transitory, allowing monetary-policy settings to remain accommodative. On Tuesday, the Labor Department reported that core (less food and energy) consumer prices increased 0.1% in August, below consensus expectations for a 0.3% increase and the smallest gain since February. Declines in airfares and used car prices drove much of the shortfall. 

Delta variant remains a concern: The spread of the delta variant appears to have dented consumer confidence and disrupted the momentum in job growth. An average of roughly 1.48 lakh coronavirus cases has been reported each day in the United States while the total cases have crossed the 42 million mark. To battle this, the pace of vaccination has also picked up. About 55% of the eligible American population (age 12 and over) are fully vaccinated and over  64.3% have received the first dose.

Oil prices at one-month high: Oil prices gained the week, to hit a one-month high supported by recent data that showed a sharp drop in U.S. crude inventories as refiners in the US Gulf region and oil facilities offshore were still recovering from Hurricane Ida. Crude inventories fell by 6.4 million barrels in the week to 417.4 million barrels. The storm caused a global decline in supply for the first time in five months but the market is set to begin approaching balance in October as the OPEC and allies such as Russia carry out plans to increase supply.

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