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.
Stocks finished the week lower on mixed economic data. Energy stocks gained for the week as storms in the Gulf of Mexico threatened to disrupt oil production while materials and utilities lagged. The August CPI came in lower than expected, supporting the Federal Reserve’s position that transitory factors are caused by rising prices.
It was a good week for equities as stocks hit new all-time highs once again. The Pfizer Vaccine’s full FDA approval helped sentiment early in the week before turning sad with the news of an attack at Kabul airport in Afghanistan. Investor sentiment ended on a high note with the Federal Reserve Chairman Powell on Friday.
Inflation will gain most of the attention this week, with data reports expected on consumer and producer level inflation. With the labor market on the mend, inflation will continue to be on investors’ minds as both labor and inflation are key factors that influence the Federal Reserve’s decisions on policy. The consumer price index and the producer price index will be released on Wednesday and Thursday, respectively.
With U.S. markets focused on the economic recovery and rising inflation, global markets were rocked by China’s social crackdown now reaching its capital markets. Several of China’s regulatory agencies cracked down on overseas IPOs, resulting in China’s stock market falling more than 10% early in the week.