Stocks in New York came to a halt as markets closed for the week, thereby pausing the stock rally that has led to major gains across major indexes. This comes as investors await next week’s inflation report, which will indicate how the Federal Reserve will respond to inflation with regard to its fiscal policy.
The benchmark S&P 500 index is up 16.6% for the year to date after falling 2.27% this past week – the largest weekly decline since March 10. Refinitiv Datastream reported that this index is trading at about 19.5 times forward 12-month earnings estimates, outpacing its long-term average of about 15.6 times.
On Friday, markets digested the latest U.S. jobs report. Wages grew at a faster-than-expected rise of 4.4% on an annual basis. Numerous experts worry that this figure remains too high above the Fed’s target inflation rate of 2%.
While inflation has continued to show signs of cooling on a consistent basis, some analysts believe that investors may experience near-term turbulence. “Our expectation is that the market takes some time to digest the strong year-to-date gains and moves into a choppy period,” Keith Lerner, co-chief investment officer at Truist Advisory Services remarked.