To The Moon

S&P 500 sinks nearly 5% for the week, all eyes now on Fed; materials top loser

The S&P 500 (SP500) on Friday posted its worst weekly performance since mid-June, slumping 4.78% for the five-day session. The losses came on the back of a solid 3.65% gain last week. Investors dumped equities in three of the five sessions.

A chunk of the week's selling came on Tuesday on the heels of a hotter than anticipated consumer price inflation report, with the headline print for Aug. rising 8.3% Y/Y. Focus is now on the U.S. Federal Reserve's policy meeting decision next week on Wednesday, with most market participants anticipating a significant rate hike of up to 75 basis points.

The yield curve inversion also accelerated during the week, with the spread between the U.S. 30-year Treasury yield (US30Y) and the U.S. 5-year Treasury yield (US5Y) hitting its widest point since 2000 on Thursday.

A Deutsche Bank survey on Monday warned that there was no bottom for the S&P 500 (SP500) yet, with only 9% of respondents thinking that the index had hit its lows for the cycle.

Investors also digested other economic data such as producer price index numbers for Aug., a rise in Aug. retail sales, a plunge in the Philly Fed's measure of manufacturing activity, an unexpected fall in Aug. industrial production, and consumer sentiment data that fell short of expectations.