Week of October 4, 2021

Last week was a rough week ending a rough month for the U.S. equity markets.  Tuesday, September 28, saw the most declines with the Dow Jones Industrial Average and S&P 500 dropping 2.04% and 1.63%, respectively, while the tech-heavy NASDAQ declined 2.83%.  For the month of September, the S&P 500 finished down 4.8%, breaking a seven-month winning streak.  The Dow and NASDAQ fell 4.3% and 5.3%, respectively, suffering the worst months of 2021.

“A combination of slowing growth, less accommodating monetary policy, China headwinds, fading fiscal stimulus, and nagging supply chain bottlenecks all conspired to weigh on investor sentiment as we head into the 4Q21,” Chris Hussey, a managing director at Goldman Sacha, said in a note.

The S&P 500 has averaged gains of 3.9% in the 4th quarter and was up four out of every five years since World War II.  “If interest rate increases moderate from here on the back of declining inflation expectations, then it wouldn’t surprise me to see the market resume its march higher as we move into the fourth quarter,” said Brian Price, head of investment management for Commonwealth Financial Network.

Economists expect about 475,000 jobs were added in September, according to an early consensus figure from FactSet.  Just 235,000 payrolls were added in August, about 500,000 less than expected.  “Markets this week are likely to take their cue from economic data as they look to Friday’s employment report for clues as to the strength of the U.S. economy,” said Oppenheimer’s Stolzfus.