Markets “In a Nutshell” for September 13, 2021
Investment Week at a Glance
Stocks finished down for the week. The Dow Jones Industrial Average fell 2.20%, the S&P 500 was down 1.70%, and the NASDAQ fell 1.60%. Foreign stocks (MSCI EAFE) were also lower, dropping 0.30%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 1.33%. (Data source: Wall Street Journal)
Market Moves Lower
For the first time since February the S&P 500 had a 5-day losing streak. With that being said, equities only fell roughly 2% and are still near all-time highs. While market volatility was expected as we move into the Fall, stocks have still not seen a 5% decline since last September (which typically happens about 3 times a year.) The stock market has been able to weather a lot of headlines recently between the Delta variant, Afghanistan, Hurricane Ida, and supply chain struggles that have caused the economy to not grow as fast as expected. GDP growth estimates for 2021 have declined recently from near 7% down to 6%. This would still be the fastest growth seen since 1984 but the reduction in expected growth has caused some worry for the markets.
Potential Market Disrupters
Since the lows in March of 2020 the market has stormed back and with very little volatility has moved up nearly 100%. One issue that could increase volatility in the near future is the current labor shortage. Companies are having to raise wages and still are not able to find enough people to work as there are currently 10.9 million open jobs. Profits have so far been unaffected but companies worry that it may become a problem. Another issue the market faces is Covid-19 as the pandemic persists through the Delta variant. The reopening has slowed and caused growth estimates to decline. Lastly one of the most important factors is when the Fed will begin to taper and when they will raise rates. Much attention is given to the Fed recently and the market is looking for more clarity on future Fed actions.
What is the average GDP growth rate in the United States since 1947? (Scroll Down for Answer)
Have a Great Week!
2. 3.19%, The current projection for 2021 GDP growth is almost double the historical average.