On the 20th anniversary of the terrorist attacks of 9/11, we remember all the lives lost that day in New York City, Washington, D.C., and Shanksville, Pennsylvania. Even in the most challenging of times – after a surprise terrorist attack, during a worldwide pandemic – Americans and the U.S. economy prove resilient in the face of adversity.
Stocks moved lower in shortened trading this week. No single noteworthy event moved markets; rather, ongoing concerns over the COVID-19 delta variant, potentially peaking GDP growth, and the possibility that the Federal Reserve could begin tapering bond purchases this year all seemed to weigh on stock prices. Prospects for an additional large-scale Congressional spending bill dimmed slightly this week as haggling between factions in the Senate and House of Representatives continues.
For the week, the S&P 500 Index finished down 1.7% while the Dow Jones Industrial Average fell 2.2%. Year to date, the S&P is up 18.7%; the Dow has gained 13.1%. First-time unemployment claims declined more than expected to a pandemic-low 310,000, while continuing claims fell to 2.78 million. The latest Job Openings and Labor Turnover Survey (JOLTS) released this week reported 10.9 million job openings in the U.S. – the highest number in the survey’s history. The incongruity of the number of current openings and the roughly 8.7 million Americans unemployed still vexes the economy. Over the course of the pandemic, many Americans have reevaluated their employment situation – with large numbers of people taking early retirement, starting their own businesses or pivoting into entirely new industries. Because the Federal Reserve examines employment as well as inflation while making monetary policy decisions, assessing the future health of the labor market remains vitally important for investors.
Internationally, various central bank announcements this week reflected differing views on how to best return to more normal monetary policy arrangements. While the European Central Bank (ECB) did not adjust interest rates, they did announce a “moderately lower pace” of asset purchases. The Reserve Bank of Australia reiterated their tapering program, but extended the length of time they anticipate using to wind down purchases. Finally, the Bank of Canada signaled that interest rate hikes would precede any reduction in its government bond holdings. These various approaches will serve as case studies for the Federal Reserve in charting its own monetary policy course over the coming year.
For more economic insights and to learn strategies for dealing with the evolving pandemic, join our Back to Better webinar on Wednesday, September 22nd at 12 pm EST with Jeffrey Kleintop, Chief Global Investment Strategist at Charles Schwab, and Patience Shutts, M.S. LMFT, speaker and facilitator of the Wise Within workshop. Jeffrey will share his perspective on the current economic and investment climate facing investors and what to expect going forward. Patience will offer actionable insights on how people can make progress during trying times. We invite you to register here.
As always, please contact us with any questions; we are here for you every step of the way.