US weekly: S&P 500 recedes from record high as inflation, macro data weigh

US weekly: S&P 500 recedes from record high as inflation, macro data weigh

Last updated: 17 Jul, 2021 | 04:19 pm

US weekly: S&P 500 recedes from record high as inflation, macro data weigh

US markets started off the week on a very strong note with S&P 500 hitting a new record, as sentiments remained upbeat ahead of quarterly earnings, and important macro data to be released later in the week. The index receded from record high on Tuesday as a huge spike in inflation dented sentiments. The consumer price index increased 5.4% in June from a year ago, a 13-year high.

The US stocks closed flat on Wednesday as Fed Reserve chairman Powell reassured investors that the increase in inflation would be temporary, and the Fed will continue its easy monetary policy. US markets fell on Thursday due to decline in Energy and Technology stocks. US markets continued its fall on Friday as inflation fears overshadowed strong retail numbers and a better than expected earnings report.

For the week, the S&P 500 shed 1%, while the tech-heavy Nasdaq ended 2% lower.

Weekly US market stats with IND

Let’s see the major developments during the week

Inflation soars to 13-year high: Inflation in the US rose to a 13-year high in June, driven by a rise in the cost of used cars. Consumer prices increased by 5.4% YoY in June, up from 5% the previous month. This is the highest increase since August 2008. The jump in prices will put pressure on the Federal Reserve to tighten monetary policy sooner than expected.

Fed reiterates support: In the week, the US Fed Chairman acknowledged that the recent spike in inflation was more than what was anticipated earlier. However, Jerome Powell reiterated that inflation pressures are temporary and “substantial further progress is still a ways off” in terms of the Fed’s employment and inflation goals. Before it decides to increase short-term interest rates, the Fed is expected to begin tapering asset purchases, slowly putting an end to its pandemic-driven easy monetary policy. 

Macro data mixed: The week’s macro data was a mixed bag. Manufacturing output decreased in June, mainly due to shortage of semiconductor chips. An index of manufacturing activity in the New York region hit a new record high, however, reflecting strength in both new orders and shipments. Further, weekly jobless claims continued to trend lower, and hit a fresh pandemic-era low of 360,000, in line with analyst estimates. Retail sales rose 0.6% in June, much higher than expectations for a 0.4% decline, indicating the strong economic recovery in the country.

Oil prices decline: Crude oil prices declined 4% in the week after investors trimmed their positions due to reports that the OPEC+ may increase oil output. The prices saw biggest decline since mid-March amid concerns of Delta variant cases and the prospects for an OPEC+ deal to boost supply. 

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