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Market Recap
WEEK OF SEP. 18 THROUGH SEP. 22, 2023
The S&P 500 index fell 2.9% last week, marking its third consecutive week in the red as a boost to the Federal Open Market Committee's median rate outlook for 2024 and 2025 added to investors' rate policy worries. The index ended Friday's session at 4,320.06, down from last week's closing level of 4,450.32. This extended the index's September slump; the market benchmark is now down 4.2% for the month to date. However, the S&P 500 is still solidly in positive territory for 2023 with a year-to-date climb of more than 12%.
The Federal Reserve's FOMC opted not to change rates at the Wednesday conclusion of its two-day meeting. The policy-setting committee still lifted its median rate outlook for 2024 and 2025, indicating it expects to keep rates higher for longer than previously anticipated. The FOMC's 2024 median rate outlook is now at 5.1%, up from its outlook for 4.6% in June, while its outlook for 2025 rose to 3.9% from 3.4%. This comes as the committee noted inflation remains elevated.
On Friday, Fed Gov. Michelle Bowman said she supported the committee's decision to hold rates this week amid strong spending data, a drop in inflation and downward revisions to jobs created in previous months. However, she continues "to expect that further rate hikes will likely be needed to return inflation to 2% in a timely way," Bowman said in prepared remarks.
All of the S&P 500's sectors fell on a weekly basis, led by a 6.3% slide in consumer discretionary, a 5.4% drop in real estate and a 3.7% decline in materials. Health care had the smallest decline, edging down 1.2%.
The consumer discretionary sector's decliners included shares of Caesars Entertainment (CZR) and MGM Resorts International (MGM) as the casino operators continue to grapple with the fallout of recent cybersecurity issues. Shares of Caesars fell 13% on the week while MGM shed 11%.
Real estate investment trusts were among the hardest-hit stocks in the real estate sector amid investors' rate worries. Shares of Alexandria Real Estate Equities (ARE) fell 11%, Boston Properties (BXP) lost 9.0% and Prologis (PLD) declined 7.4%.
This week, economic data will include August new home sales and September consumer confidence on Tuesday, August durable goods orders on Wednesday, revised Q2 gross domestic product on Thursday and August personal consumption expenditures expected on Friday.
