The S&P 500 index rose 3.6% last week, changing direction after having tumbled a combined 8.3% in the previous three weeks. However, the index is still solidly in the red for the year to date with a decline of 15% for 2022.
The weekly climb in US stocks came as investors grew more comfortable with the idea of another 75 basis-point rate increase by the Federal Open Market Committee as the policy-setting committee seeks to tamp down on inflation. Fed officials have made a number of comments in recent weeks indicating a rate increase of that size is likely to come this month following increases of 0.75 point each in June and July.
All of the S&P 500’s sectors rose last week. Consumer discretionary had the largest increase, up 5.6%, followed by a 4.9% climb in materials and gains of 4.4% each in financials and health care. Energy had the smallest increase, eking out a 0.6% rise.
Travel-related stocks were the best performers in the consumer discretionary sector as investors bet cruise operators and resort operators would benefit from consumers increasingly resuming travel following shutdowns earlier in the pandemic.
Next week, all eyes will be on updated inflation data as the New York Fed’s three-year inflation expectations for August will be released Monday, followed by the August consumer price index on Tuesday and the August producer price index on Wednesday. Other data due next week include August retail sales on Thursday and the University of Michigan’s September reading of consumer sentiment on Friday.
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