A surprisingly sharp drop in US consumer sentiment checked what had been turning into a run away stock market rally.
he University of Michigan said its preliminary consumer sentiment index fell to 70.2 in the first half of this month from a final reading of 81.2 in July. That was the lowest level since 2011 and a worrying sign for the economy as Americans gave faltering outlooks on everything from personal finances to inflation and employment.
“The renewed plunge suggests the latest wave of virus cases driven by the Delta variant could be a bigger drag on the economy than we had thought,” said Andrew Hunter, an economist at Capital Economics.
US stock market indexes slipped immediately after the report was released. Earlier the Dow Jones and the S&P 500 share indices had opened at record highs yesterday, boosted by Walt Disney and tech-related shares, while signs of cooling inflation and a strong recovery in corporate earnings put the indexes on track for a second straight weekly gain.
Six of the 11 major S&P sectors advanced in early trading, with communications services, which houses Netflix, Disney, Facebook and Google-owner Alphabet rising 0.5pc.
Disney jumped 3.1pc after it topped Wall Street expectations for quarterly earnings as its streaming services picked up more customers than expected and pandemic-hit U.S. theme parks returned to profitability.
A stellar earnings season, improving economic data and the Senate’s passage of a large infrastructure bill have all reinforced investors’ belief in the economic recovery. , pushing U.S. stocks to all-time highs in the past few sessions.