By Ramkumar Venkatramani

After weeks of gains, the markets began displayed signs of weakness during the concluded week. The S&P 500 index slipped by 1.26%, ending at 4228.48. The technology-dominated Nasdaq Composite index slumped by 2.62% ending the week at 12705.22. The Dow Jones industrial average, which is comprised of 30 blue chip stocks, was rather flat, ending the week at 33706.74.

After euphoria over slightly lower inflation numbers, and stronger than expected jobs data, the markets were hit by a series of no-so-positive reports and conjectures.

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Firstly, minutes from the recently concluded Fed meeting conveyed that the organization is committed to continue fighting rising prices and would not ease off the rate-hike pedal until inflation is subjugated. The Fed meeting minutes are widely followed by economists and traders for signs and clues about future action.

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Secondly, data from the US Commerce Department and the National Association of Realtors showed that new housing starts and existing home sales fell during July. Mortgage rates, while slightly lesser from a few weeks ago, are still at more than two times the rates that were prevalent a year ago. Inflation is also adding to the costs of construction products, thereby raising the costs of home-buying.

Finally, retail sales data was also disappointing, with an unexpected slowness at gas stations and car dealers. The silver lining in the clouds came from strong results at both Walmart and Home Depot, behemoths of the US retail industry. Both beat street estimates and reported record quarterly numbers.

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Weakness in the markets was not restricted to the US. Across the globe, European and Asian bourses also saw their major indices decline. Europe continues to be haunted by high inflation and an overall sub-par outlook. China meanwhile surprised with a rate cut as the world’s second-largest economy witnessed slower factory output and receding consumer spending. Commodities too remained volatile with oil falling close to 3%. Fear over a global slowdown is weighing down commodity prices such as oil and copper.

Looking ahead at the week, several key pieces of US economic data would be released. Some of the data include US manufacturing purchasing managers index, durable goods orders, and more importantly, unemployment claims and real GDP data.

The coming week would conclude with the University of Michigan consumer sentiment index data on Friday, a popular measure of consumer attitudes. The markets are now juxtaposed in an interesting mix of positive and negative data. We can anticipate more of the same for another probably volatile week.

(Author is Lead – Investment Advisory, Kristal.AI)