Consumers Worried
Stocks finished the week lower as worries over rising prices and deteriorating consumer confidence pulled equities lower. Consumer sentiment measured by the University of Michigan Consumer Sentiment index fell to a multiyear low, indicating that consumers are worried about rising prices. Inflation continues to be an issue, with both the producer and consumer prices increasing more than expected.
Factory Orders Exceed Expectations
Economic data came in a generally strong showing that the economy has gained strength as the delta variant has waned. Factory orders increased more than expected, and October’s unemployment report also topped estimates. The pickup in hiring was widespread across many industries, including the leisure and hospitality group.
Q3 Reports Boost Market
Strong quarterly earnings reports lifted the equities market to new highs last week. Earnings, in general, have surprised to the upside except for a few notable names such as Apple and Amazon that disappointed, blaming supply chain bottlenecks. For the week, consumer discretionary companies performed well, helped by Tesla, saying that rental company Hertz agreed to buy 100,000 of its electric vehicles.
Monthly Performance Report September 2021
To the casual eye equity markets led by the S&P 500 index-free climbs past another record gain of 2.38% in July was anything but routine. With close scrutiny as the undertow from the economic skepticism from the delta variant and emerging markets uncertainty with China’s sudden stock market crackdown temporarily splintered the global recovery. What should have been a choreographed global economic recovery instead behaved like an economic slowdown from the composition of the equity and bond markets.
The Story’s Still Positive
Gains in the equity markets led to new record highs last week. Earnings reported by companies continued to beat expectations, pulling indices higher. Real estate, utilities and health care shares outperformed.
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A bit of a rebound
After struggling earlier in the week, equities rallied to finish the week higher on back of strong earnings and positive economic news. Real estate, materials and consumer discretionary sectors outperformed while communication services lagged.
Crude Highest Since 2014
Crude prices crossed the $80 per barrel last week, the highest level since 2014. The energy demand rebound from the depths of COVID-19 combined with global transport bottlenecks complicating fuel distributions has raised prices for oil, gas, and coal. The rebound helped energy stocks rally for the week while airline shares lagged due to higher fuel costs. Higher oil prices will provide additional upward pressure on inflation,
September Effect
Since 1950, the Dow Jones Industrial Average has averaged a 0.8% decline, and the S&P 500 had a 0.5% drop during September, according to Investopedia. This annual anomaly is named “The September Effect.” This September was no different. Last week, equities pulled back on inflation and interest rate fears to close the month in the red for major equity indexes.
Evergrande Losses Reversed
Fears of financial contagion coming from Chinese developer Evergrande, the country’s second largest, sent stocks diving at the start of the week. By Thursday, the losses were reversed as investors became more confident that the damage was mostly limited to China.