The S&P 500 index rose 1.5% last week in a rally that sent the market benchmark above the 4,500 level for the first time, as investors were relieved by comments from Federal Reserve Chairman Jerome Powell that they interpreted as a sign the central bank isn’t rushing to begin tapering its bond buying stimulus program.
The weekly climb was boosted by a 0.9% Friday increase as Federal Reserve Chair Jerome Powell said while the central bank could begin scaling back its asset purchases by the end of the year if the economy performs as expected, he anticipates rising inflation will prove transitory and sees the Delta variant of COVID-19 as posing near-term risk. The central bank thus “will be carefully assessing incoming data and the evolving risks,” Powell said.
Investors saw the comments by Powell as an indication that the central bank isn’t in a rush to begin tapering its stimulus efforts even as it still anticipates beginning tapering the bond buying by year-end. This helped ease the worries of investors who were concerned about how soon the Fed’s Federal Open Market Committee might begin the tapering.
The energy sector had the largest percentage increase last week, up 7.3%, followed by financials, up 3.5%. Other strong gainers included communication services, consumer discretionary, materials and industrials, up by more than 2% each. Technology climbed 1.4%.
Just four of the S&P 500’s 11 sectors were in the red for the week, led by a 2.1% drop in utilities. The other declining sectors included consumer staples, down 1.4%; health care, down 1.2%; and real estate, off 0.3%.
Next week, as the month of August wraps up, all eyes will be on the August employment data, including private sector data from ADP on Wednesday, the Labor Department’s weekly jobless claims on Thursday and the monthly nonfarm payrolls and unemployment rate to be reported Friday by the Labor Department.
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