Weekly Market Update
September 27, 2021
Market Data as of Week Ending: 9/24/2021 unless noted otherwise

U.S. stocks rebounded and finished the week in positive territory after declines early in the week. Investor sentiment shifted following the Fed’s announcement that they could begin reducing the monthly asset purchases as soon as next meeting. Mid cap stocks outperformed both smaller and larger sized peers and value stocks generally outperformed their growth counterparts. Sector performance was mixed with gains in more cyclical and economically sensitive sectors such as energy and financials. Traditionally defensive sectors such as real estate, utilities, consumer staples, and health care finished the week with losses. Developed foreign stocks in Europe and Asia underperformed U.S. stocks while Emerging Market stocks lagged developed foreign markets.

U.S. Treasury yields advanced sharply as the 10-year increased to finish the week at 1.45%. Projections from the Fed showed that half of officials expect at least one interest rate hike in 2023 and inflation expectations have increased for next year. All bond segments finished the week with losses and the sudden rise in yields put the most pressure on long duration government bonds. Despite a favorable backdrop for risk assets, both investment grade and high yield corporate bond yields rose and ended the week with yields above 2.1% and 4.6%, respectively.

Economic data released during the week was mostly overshadowed by the Federal Reserve’s two-day policy meeting. However, there were a few notable reports that delivered mixed results. Shortly after reaching a recovery low, weekly jobless claims rose for the second consecutive week to 351,000. Both the services and manufacturing flash PMI figures declined compared to last month and came in below expectations at 54.4 and 60.5, respectively. However, housing data was much better as both housing starts and permits beat expectations. Housing starts in August increased nearly 4% compared to last month and more than 17% year-over-year to a seasonally adjusted annual rate of 1,615,000. Economic data was also unfavorable for Europe as the Flash Eurozone PMI Composite dropped to a 5-month low of 56.1.