Week in Review: August 20, 2021

Equity markets ended the week lower, weighed down by a number of factors including growing concerns about the spread of the coronavirus Delta variant, disappointing U.S. economic data (retail sales), and uncertainty surrounding the U.S. Federal Reserve and monetary policy.

Despite its weekly decline, on Monday the S&P 500 gained 0.1%, enough to increase its return from its pandemic low on March 23, 2020 to 100%. In total, it took the venerable index 353 trading days to reach that milestone, the second fastest such occurrence, trailing only the 85 trading days it took back in 1933.

The Fed released the minutes from its July Federal Open Market Committee (FOMC) meeting and, as expected, there was a robust conversation regarding tapering its current asset purchases. While most participants felt the price-stability aspect of the Fed’s dual mandate has been met, most participants felt that further improvement was needed to achieve its maximum employment mandate. Regarding the timing of tapering, the majority of participants felt that it would be appropriate to start this year with some believing that it should start in the “coming months.” However, several others felt that given current conditions it would be more appropriate to delay tapering until “early next year.” For the most part markets took the news in stride; certainly much better than the “taper tantrum” of 2013.

Oil fell 9%, its largest weekly decline in nine months, amid concerns about demand destruction stemming from the spread of the coronavirus Delta variant. Oil prices are now down 17% from their mid-July peak of $75.