US weekly: S&P 500 posts worst week in 3 months as inflation fears weigh

US weekly: S&P 500 posts worst week in 3 months as inflation fears weigh

Last updated: 12 Sep, 2021 | 09:21 am

US weekly: S&P 500 posts worst week in 3 months as inflation fears weigh

US markets were closed on Monday on the account of Labour Day. S&P 500 and Dow Jones ended lower on Tuesday, after a few macro data points showed that the pace of economic recovery has slowed down a bit. 

The indices ended lower on Wednesday due to fear that the Delta variant could hamper the current economic recovery and uncertainty regarding Fed’s accommodative policies.

The Dow Jones Industrial Average and S&P 500 were on a three-day losing streak on Thursday, as investor sentiment remained dampened due to the uncertain environment. On the positive side, initial weekly jobless claims fell to a pandemic-era low of 310,000, a decrease of 35,000 from the prior week.

On the final day of the week, U.S. stock indexes ended lower. Nervousness surrounding the Delta variant and Fed tapering timing persisted. The economic calendar delivered some positive news on the employment front to counter Friday's inflation report that showed pricing pressures continued. The Dow Jones ended the week 2.2% lower, while the S&P 500 shed 1.7% in the week.

Weekly market stats with IND

Let’s see the major developments during the week:

Jobs report: According to the Job Openings and Labor Turnover Survey (JOLTS) data released Wednesday, there were a record 10.93 million positions waiting to be filled in July, almost 1 million more than consensus estimates. Weekly jobless claims also fell more than forecast to a new pandemic-era low of 310,000. 

Producer price data send bond yields higher: Friday morning’s producer price data led to a  reversal in the yield on the benchmark 10-year U.S. Treasury note, leaving it modestly higher for the week. (Bond prices and yields move in opposite directions). The week’s 30-year U.S. Treasury bond auctions also witnessed strong demand.  But, the high yield market was fairly quiet, as concerns over economic growth and the Federal Reserve’s eventual tapering of its monthly asset purchases contributed to a weaker economic backdrop. Renewed concerns around inflation also led to fears that the Fed may taper its asset repurchases sooner than expected.

Supply-chain disruptions: are proving to be more persistent than initially thought, limiting the pace of economic recovery. Widespread labor and material shortages are restraining production, holding back the recovery, and driving prices higher. An example of the snags in supply chains is the semiconductor shortages, which are expected to last into next year and have led major automakers to recently announce additional plant shutdowns. 

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 1.45 lakh coronavirus cases has been reported each day in the United States while the total cases have crossed the 40 million mark. To battle this, the pace of vaccination has also picked up. About 54% of the eligible American population (age 12 and over) are fully vaccinated and over  63.5% 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. Oil futures ended lower pressured by reports that China plans a release from its crude-oil reserve, in a move to ease commodity inflation.