Week of September 13, 2021

All three major U.S. equity markets finished lower last Friday, with the Dow and S&P 500 posting a fifth straight day of losses, while the NASDAQ posted its third consecutive negative trading session.  For the week, the Dow and S&P 500 dropped 2.15% and 1.69%, respectively, which was each average’s worst weekly performance since June.  The tech-heavy NASDAQ posted its worst week since July, sliding 1.61%.  Despite last week’s losses, are still relatively close to their record levels.  The Dow, S&P 500 and NASDAQ are down only 2.87%, 1.92% and 1.87%, respectively, from there recent record highs.

Data released last Friday showed that the producer price index (PPI) jumped 0.7% and 8.3% year-over-year, which was the biggest annual increase since these records were first kept in November 2010.

The closely watched consumer price index (CPI) will be released on this Tuesday, at which point Wall Street will see how much of the increasing costs are being passed along to consumers.  Economists surveyed by FactSet are expecting the report to show that the CPI jumped 5.3% on an annual pace in August.  Retail sales data will be released later this week.

“Supply bottlenecks, inventory shortages, higher commodity prices and higher shipping rates have all contributed to higher input costs,” noted Charlie Ripley, senior investment strategist for Allianz Investment Management.  “Friday’s data on wholesale prices should be eye-opening for the Fed, as inflation pressures still don’t appear to be easing and will likely continue to be felt by the consumer in the coming months,” Mr. Ripley added.

The Federal Reserve will begin its two-day policy meeting on September 21, where investors will be looking for clues about the what actions the Fed might take, especially any changes to their bond-buying program, referred to as federal open market operations.