The S&P 500 index fell 2.8% last week as investors digested mixed quarterly earnings reports and signals that the Federal Reserve’s policy-setting committee may raise interest rates by a half-percentage point in May.
With just one week of April remaining, the index is now down 5.8% for the month to date. It is down 10% for the year to date.
Last week’s drop came as US companies’ quarterly earnings reports continued to come in with mixed results and guidance as companies grapple with rising costs and supply-chain challenges.
With hopes of taming inflation, the Federal Reserve’s Federal Open Market Committee may raise rates in May by a half-percentage point. Such a move, which was signaled Thursday by Fed Chairman Jerome Powell, would be larger than the quarter-point increase that was made at the last meeting. The potential for more aggressive monetary tightening has contributed to some trepidation from investors.
All but two of the S&P 500’s 11 sectors fell last week. Communication services had the largest percentage drop, tumbling 7.7%, followed by a 4.6% slide in energy, a 3.7% decline in materials and a 3.6% drop in health care. The two sectors in the black were real estate, up 1.2%, and consumer staples, up 0.4%.
Next week, companies planning to release quarterly results include Coca-Cola (KO), 3M (MMM), Visa (V), Microsoft (MSFT), General Motors (GM), Boeing (BA), Caterpillar (CAT), Apple (AAPL), Amazon.com (AMZN), Chevron (CVX) and Exxon Mobil (XOM).
The economic calendar for next week will be heavy on housing and inflation data. Among the reports expected, March new home sales will be released Tuesday, followed by March pending home sales on Wednesday, and March personal consumption expenditures or PCE on Friday.
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