(AP) – Stocks are closing out September with their worst monthly loss since the beginning of the pandemic.
The S&P 500 ended the month down 4.8%, its first monthly drop since January and the biggest since March 2020.
After climbing steadily for much of the year, the stock market became unsettled in recent weeks with the spread of the more contagious delta variant of COVID-19, a sudden spike in long-term bond yields and word that the Federal Reserve may start to unwind its support for the economy.
The S&P 500 fell 1.2% Thursday. It’s still up 14.7% for the year.
Inflation will likely remain the key concern hanging over the markets for the rest of the year, said Jay Pestrichelli, CEO, of investment firm ZEGA, and it could put the Federal Reserve in the tough position of having to raise rates earlier than anticipated.
Investors are still trying to gauge whether those issues are temporary and part of the economic recovery or could linger longer than expected. The upcoming round of corporate earnings reports could shed light on how companies are dealing with those problems.
“The jury is still out on this and we don’t really know if it’s demand-driven or supply-driven inflation,” Pestrichelli said. “If you end up getting lower growth and higher inflation, then you get stagflation and that’s no good for the market.”