The S&P 500 index fell 0.3% last week, its first weekly drop since the final week of September, as inflation worries ramped up amid a larger-than-expected rise in the US consumer price index.
Despite last week’s decline, the S&P 500 is still in positive territory for November, up 1.7% for the month to date. The market benchmark is up 25% for the year to date, with just seven weeks remaining in 2021.
The index’s strong climb last year has come amid the recovery of the US economy from the widespread, pandemic-related closures that were seen in 2020. Many companies have been reporting financial results above analysts’ expectations and many economic reports have also topped economists’ estimates. However, price increases have also been an underlying worry, and the October consumer price data released last week brought that concern to the forefront.
The US seasonally adjusted consumer price index, a measure of inflation, rose by 0.9% in October, ahead of expectations for a 0.6% increase, according to data released Wednesday by the Bureau of Labor Statistics. Core CPI, which excludes food and energy prices, rose by 0.6%, faster than the consensus estimate for a 0.4% increase. The year-over-year rates for overall and core CPI accelerated to 6.2% and 4.6%, respectively, from 5.4% and 4% in the previous month.
The consumer discretionary sector had the largest percentage drop of the week, falling 3.2%, amid the consumer price concerns. That was followed by a 1.7% decline in energy, a 1.1% slip in utilities and a 0.5% drop in communication services. Consumer staples and real estate also edged lower.
Five sectors still ended the week in positive territory: Materials climbed 2.5%, followed by a 0.6% rise in health care and a 0.4% increase in industrials. Financials and technology also eked out slight gains.
Next week, economic data in focus will include October retail sales, industrial production and capacity utilization on Tuesday, followed by October building permits and housing starts on Wednesday and weekly jobless claims on Thursday.
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