Energy and commodity stocks drove the S&P 500 down on Friday. The decline was around 0.8%, which is the index 'first decrease this month. Clearly, investors are becoming worried about the ongoing rise in inflation, which affects the sustainability of economic growth.
Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co, commented on the situation and said investors are anxious because even if profits were high, there is uncertainty on what will happen in the future.
In addition, the University of Michigan reported last Friday that the preliminary sentiment index fell to 80.8 in July, from 85.5 the previous month. The figure is also lower than all estimates in the Bloomberg survey, whose median forecast was 86.5.
On the bright side, outlook is boosted by repeated assurances of Fed Chairman Jerome Powell, who continues to reiterate that the current spike in inflation does not yet justify a cut in stimulus.
Corporate earnings were also rather high, thanks to optimism about the resumption of consumer demand.
But other central bank members, such as representatives from New Zealand, Canada and the UK have a hawkish stance, which leaves investors wondering how long the Fed can afford to stay on the sidelines.
