The S&P 500 index fell 0.3% last week amid worries that further monetary tightening might be needed to keep inflation in check after January Consumer Prices came in higher than expected.
The index is almost flat for the month with a February-to-date gain of almost 0.1%. It’s up 6.2% for the year to date.
The slim movement for the week came as data showed the Consumer Price Index rose 0.7% last month, surpassing the consensus estimate according to Econoday for a 0.4% increase. On an annual basis, the PPI advanced 6%, which was higher than analysts’ consensus estimate for 5.5% growth, but down from December’s 6.5% pace.
The higher-than-expected Consumer Prices were unwelcome news for investors who’ve been hoping for inflation to ease enough for the Federal Reserve’s policy-setting committee to slow down its rate increases. Adding to the concerns, Cleveland Fed President Loretta Mester said last week that the risks of inflation accelerating are still tilted to the upside and will require further monetary policy tightening.
The impact of the rate increases was evident in January housing data released last week as housing starts fell more than expected in January amid elevated mortgage rates.
The energy sector — which had been the only gainer last week — led last week’s decliners with a 6.9% drop. Other decliners included real estate, down 1.4%, and materials, down 1.1%. The health care, technology and financial sectors also fell slightly.
The gainers were led by consumer discretionary, which rose 1.6%, followed by gains of 0.9% each in utilities and consumer staples. Other gainers included industrials and communication services.
This week’s earnings calendar will feature retailers including Walmart (WMT), Home Depot (HD) and TJX (TJX) as well as other companies such as Medtronic (MDT), NVIDIA (NVDA) and Intuit (INTU).
The market was closed on Monday for the Presidents Day holiday in the US. Economic reports expected in the rest of the week include January existing and new home sales, Q4 gross domestic product, January consumer spending and January personal consumption expenditures.
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