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With under an hour to the close of share trading on Wall Street, the Dow was down 0.62% or 95 points at 15,233, while the wider-encompassing S&P 500 slipped 0.55% to 1689.3. That leaves both indices down more than 1% for the week, following three weeks of gains previously.
Sentiment has been weakened by US Congress’ inability to strike a budget deal for the new fiscal year, with the deadline before a government shutdown now barely more than one working day away.
Economic data has not supported the stock market. The consumer sentiment index from the University of Michigan fell in September to 77.5, the lowest final reading for the index since April. A fall in consumer attitudes would normally be expected to lead to weaker consumer spending, which makes up the majority of the US economy.
Consumer spending did advance slightly in August, rising to 0.4%, which will help to swell third-quarter GDP. The modest nature of the increase combined with wavering consumer sentiment does not inspire me with too much confidence, however.
Inflation is still not showing any signs of warming up, with the Personal Consumption Expenditure (PCE) price index rising just 0.1% in August. That takes the year-on-year change to 1.2%, below the Fed’s target rate. Given that part of the Fed’s mandate is to control inflation, both on the upside and downside, this could well stay the Fed’s hand from tapering once again at the October FOMC meeting.