The market ended a red month with another red day while investors await action in congress on government funding, the debt ceiling, and the infrastructure bill. September is the first monthly decline for the S&P 500 since January.
Two failed rallies for the Nasdaq ended in a decline for the day while the Dow Jones completed the day with a gain. Growing concerns about the debt ceiling debate in Washington and continued inflation in the economy have Investors playing defense.
Stocks fell on Tuesday among fears that the US government could shut down and default on its debt if there is no agreement in Congress to raise the debt ceiling this week. Treasury yields rose while interest-rate sensitive Technology stocks led markets lower.
Despite gains in the broader market, the technology sector weighed down the Nasdaq as Treasury yields increased. Core Durable Goods orders exceeded pre-pandemic levels and showed high demand for transportation items such as airplanes.
Markets rallied for a third day on an improved economic outlook, bolstered by the Fed’s Jerome Powell, who stated the economic decline and rally back to health is without modern precedent.
The Fed’s reassurances on the economic outlook from Wednesday turned investors optimistic and sent indexes higher. Energy and Financials topped the sector list for a second day, two sectors that often lead the market out of a slump.
The Fed’s optimistic view on the economy and reluctance to set an exact timeline for bond tapering got a positive reaction from investors. The US Dollar strengthened while the Treasury yield curve flattened.
Equity markets chopped up and down to end sideways while Treasury yields rose as investors remained cautious ahead of the Fed announcements on Wednesday.
The narrow gains that held up markets last week turned into broad selling today, causing a sharp decline in all four major indexes. Fears that China’s Evergrande would default on credit obligations exasperated worries over the health of the economy.
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.