The S&P 500 index slipped 0.1% last week as the market digested a quarter-point rate increase from the Federal Reserve. The index fell for a second straight week and ended Friday's session at 7,650.50. The market benchmark is down 0.5% for September but up 12% this year.
The Federal Reserve raised its target rate by 0.25 percentage point to 3.75%-4.00%, its first increase since 2023, in a unanimous decision. Policymakers’ median year-end projection of 4.1% implies roughly one additional quarter-point increase, suggesting officials remain concerned that inflation has not cooled enough. The outlook keeps borrowing costs elevated and makes incoming inflation and labor data especially important for the next move.
Housing starts fell 2.6% in August, but the details were mixed as single-family construction rose 7.6% while building permits declined 2.7%. The increase in single-family starts suggests some underlying demand remains, while weaker permits, a forward-looking measure of future construction, point to caution among builders. Mortgage rates near 7% could continue to limit affordability and slow a broader housing recovery.
The utilities sector had the largest percentage drop last week falling 3%, followed by a 2.35% fall in financials, a 2.3% decline in real estate and a 1.9% slip materials. Industrials, consumer discretionary, energy and consumer staples also moved lower.
Three sectors rose on the week as health care climbed 1.8%, communication services gained 1.2% and technology was up 1.1%.
Meta Platforms (META) gave the communication services sector a boost, climbing 2.7% as the Facebook parent launched Meta One, a new subscription service offering enhanced AI capabilities and premium features across Instagram, Facebook, WhatsApp and Meta AI. Meta said the subscriptions are part of a broader effort to diversify revenue beyond digital advertising.
Earnings reports this week are expected from companies including Costco Wholesale (COST), AutoZone (AZO), Darden Restaurants (DRI), Cintas (CTAS), Paychex (PAYX) and General Mills (GIS).
Economic data will include the US Manufacturing Purchasing Managers' Index for September, as well as August new home sales and durable goods.
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