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Weekly Updates

Real Estate Gains, Energy, and Industrials Lead Markets Lower

Weekly Update – May 21, 2021

  • The S&P 500 index fell 0.4% last week, the benchmark’s second consecutive week in the red, amid continued inflation worries.
  • The S&P 500 ended the week at 4,155.86, down from last week’s closing level of 4,173.85. This is the first time since February that the index has had back-to-back weekly declines.
  • With the S&P 500 having fallen in two of May’s three weeks so far, it is now in negative territory for the month, down 0.6% for the month to date. However, it is still up 11% for the year to date.
  • Energy and industrials had the largest percentage drops last week, down 2.8% and 1.7%, respectively. Other sectors in the red included financials, consumer discretionary, materials and communication services.
  • On the upside, real estate had the largest percentage increase of the week, up 0.9%, followed by a 0.7% rise in health care and a 0.3% increase in utilities. Technology and consumer staples eked out gains of about 0.1% each.
  • The mixed activity came as investors continued to worry about larger-than-expected April inflation figures reported last week and fretted over how to view the latest weekly jobless claims, which hit their lowest level since the COVID-19 pandemic began. While the improving employment data show the US economy is recovering, investors worry the recovery could lead to the Federal Reserve ending its easy-money policies sooner.
  • The drop in the energy sector came amid concerns about inflation and reports that Iran and the US were nearing a nuclear agreement that would call for sanctions on Iran’s oil production to be lifted. Among the decliners, shares of Chevron (CVX) shed 4.9% on the week.
  • Decliners among industrials included shares of John Deere (DE), which posted a 6.3% weekly drop despite reporting higher fiscal Q2 earnings Friday and raising its fiscal 2021 income forecast above analysts’ estimates. While the agriculture and construction equipment maker’s shares rose 1.3% Friday after the Q2 report, the Friday gain failed to outweigh declines posted earlier in the week.
  • In real estate, gainers included shares of Simon Property Group (SPG), which edged up 0.2% amid positive analyst actions from Piper Sandler and Morgan Stanley even as S&P downgraded its credit rating on the stock by one notch to A-. Piper Sandler raised its price target on SPG to $150 from $130 while maintaining its investment rating on the shares at overweight. Morgan Stanley, which also kept its investment rating on the stock at overweight, raised its price target on Simon Property Group to $140 from $135.
  • Next week, April new home sales and the May consumer confidence index will be released Tuesday, followed by revised Q1 gross domestic product and April durable goods and pending home sales on Thursday. Friday’s economic reports will include April core inflation as well as May consumer sentiment.
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