The S&P 500 index fell 2.2% last week as losses logged in the final days of Q3 amid worries about inflation and supply chain issues outweighed a positive start to Q4 on Friday, as data showed August consumer spending rose more than expected.
The S&P 500 posted a 4.8% drop for the month of September, marking its first monthly drop since this January and its largest monthly decline since March 2020, when the pandemic began prompting shutdowns. Still, the index edged up 0.2% in Q3 as gains in the first two months of the quarter helped narrowly outweigh the September slump. It is now up 16% for the year to date.
The week’s decline came as investors exerted caution into the end of the quarter amid concerns about inflation, supply chain disruptions and continued pandemic impacts on economic growth. Adding to the worries, the Federal Reserve’s Federal Open Market Committee indicated last week that it may begin reducing bond buying as soon as November and could start raising rates next year.
Concerns about China’s economy have also weighed on sentiment and added to uncertainty. However, despite rising prices, data released Friday showed consumer spending rose by 0.8% in August, better than expectations for a 0.6% rise and marking a strong improvement from July’s 0.1% slip.
Investors were encouraged by the better-than-expected consumer spending data, especially heading into the holiday shopping season. Nevertheless, the weekly slide was broad, with all but one sector declining. The health care sector had the largest tumble, down 3.5%, followed by a 3.3% drop in technology. Among other hard-hit sectors, consumer staples, consumer discretionary and real estate logged declines of more than 2% each. Energy was the lone sector in the black, up 5.8% for the week.
In economic data next week, the first full week of October and Q4, all eyes will be on employment data for the just-ended month. Private-sector September jobs data will be released Wednesday by ADP, followed by the Labor Department’s weekly jobless claims on Thursday and US nonfarm payrolls and the US unemployment rate for September on Friday.
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