In holiday-shortened trading last week (the market was closed Monday in observance of Labor Day), the major stock indices all finished in negative territory. The Dow Jones Industrial Average fell 2.2% to 34,607.72 – the Dow has now fallen two weeks in a row and for the past five consecutive trading days. The NASDAQ Composite lost 1.6% to 15,115.49, while the Standard & Poor’s 500 Index declined 1.7%, ending the week at 4,458.58.
Major reasons behind the down week include market worries over COVID-19 Delta variant cases, the likelihood of the Federal Reserve reducing its bond-buying program (tapering) at some point relatively soon, and hot inflation. The August Producer Price Index released last Friday showed wholesale costs for business jumped over 8% on an annual basis.
Looking to the week ahead – we’ll get an earnings report from Oracle, along with some key economic data points. August Retail Sales are expected to come in at -1%, while the University of Michigan Consumer Sentiment Index is forecast to be 71.3. Perhaps most importantly though (and still on the inflation theme), is the Consumer Price Index data for August, scheduled to be released tomorrow by the U.S. Bureau of Labor Statistics.
Consensus estimates are for August CPI to show a 5.3% year-over-year increase. Inflation numbers are an important factor in decision making for the Federal Reserve. Fed Chair Powell recently reiterated his belief that many of the inflation pressures will be temporary, but others are not so sure, and the upcoming data will influence the policy debate and possibly the financial markets as well.
As always, feel free to contact us with any questions you may have or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC