Positive economic news couldn’t break through the September blues, making for a choppy week in the markets. Investors are balancing good economic data with the possibility that Fed may start bond tapering soon.
Energy ( XLE ) topped the sector list this week after the OPEC Monthly Report on Monday projected that demand for oil would exceed pre-pandemic levels by next year. The sector also got a boost from Crude Oil Inventories data released on Wednesday that showed much higher demand than expected.
Indexes closed lower while volume soared on quadruple-witching Friday. Only the Russell 2000 was able to end the day with gains.
Better than expected Retail Sales data help the Consumer Discretionary sector advance to the top of the sector list. However, rising Treasury Yields subdued other sectors and sent three of the four major indexes to losses for the day.
Stocks rose on Wednesday after Crude Oil supplies signaled much higher demand than expected. That boosted the Energy sector by more than 3.5%, and the improved optimism drove broad gains across the market.
US Treasury Yields slid after the morning’s consumer price index data added more confusion to the economic picture. Is lower than expected inflation a good thing or a bad thing? What does it mean for Fed monetary policy? The unanswered questions equate to risk for investors, sending them to safer bets.
The OPEC Monthly Report provided a positive outlook for the economy, stating that oil demand would exceed pre-pandemic levels next year. That sent oil futures and the Energy sector higher and turned investors more optimistic on value stocks and the re-opening trade.
This week investors wrestled with worries over a slowing economic recovery and the timing of the Fed’s bond tapering this fall. The short week opened with the Nasdaq reaching a new all-time high, but prices faded from that point through the end of the week. Glitches in cryptocurrency platforms sent Bitcoin and Ethereum lower, while NFTs sent Litecoin higher.
All sectors declined this week as the S&P 500 pulled back from all-time highs. Consumer Discretionary ( XLY ) was poised to end the week with gains before losing those gains in Friday afternoon selling.
Markets reacted on fears of a slowing economy while demand remains higher than supply in several parts of the economy, and indicators show continued inflation for producers. The day marks the fourth straight session of declines for equities.