The S&P 500 index shed 0.6% last week, amid disappointing readings on US employment and consumer sentiment as well as concerns about China’s economy. With about two weeks remaining in the month, the S&P 500 is now down 2% for September to date. However, it is up 18% for the year to date.
The week’s narrow loss comes as the end of Q3 is nearing and investors are looking for signs of what the quarter’s economic data and corporate results may show when quarterly reports start emerging in the weeks ahead. Among last week’s economic data, US retail and food service sales unexpectedly rose in August but weekly jobless claims for last week were higher than expected while the University of Michigan’s preliminary consumer sentiment index for September came in below expectations.
Investors are also concerned about China’s economy. Chinese stocks tumbled on a round of disappointing economic data, with China’s retail sales for August significantly missing expectations while multiple indicators of the real estate market showed signs of a slowdown. The pullback in China comes amid the spread of the COVID-19 Delta variant, which has been persistent in the US as well.
The materials sector had the largest percentage drop of the week, down 3.2%, followed by the 3.1% slide in utilities and a 1.6% decline in industrials. Just two sectors managed to rise last week: Energy climbed 3.3% while consumer discretionary edged up 0.6%.
Next week’s economic reports will be heavy on housing data, with the National Association of Home Builders Index for September due Monday, followed by August building permits and housing starts on Tuesday, existing home sales Wednesday, and new homes sales Friday. Investors will also be focused next week on the two-day Federal Open Market Committee meeting that will conclude Wednesday with a statement from Fed Chair Jerome Powell.
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