John Hancock: Weekly Market Recap Week Ended August 28

Baby steps

The S&P 500, NASDAQ, and Dow posted fractional weekly gains, regaining ground from the previous week’s modest declines. Stocks traded in a narrow range for the third consecutive week following a four-day rally that began on July 30.

Shaky sentiment

A monthly gauge of U.S. consumer sentiment fell amid continued worries about the inflation outlook. The University of Michigan reported on Friday that its Index of Consumer Sentiment fell to 51.7 in August, down from a 55.2 reading in July. Despite the decline, sentiment remains above the record low of 44.8 that was recorded three months earlier.

Hawkish Fed

U.S. stock indexes wavered after U.S. Federal Reserve Chair Kevin Warsh emphasized inflation risks in a speech Friday morning at a symposium in Jackson Hole, Wyoming. With recent inflation readings remaining well above the Fed’s 2% target, Warsh said that the central bank “must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”

Jobs ahead

A monthly labor market report due out on Friday will show whether a recent weakening trend for the labor market extended into August. July’s report showed a decline of 23,000 jobs, and initial growth estimates for May and June were scaled back sharply. Factoring in the latest figures, the three-month average fell to 20,000 jobs created per month—a sharp turnaround from March, when the economy added 214,000.

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