Last week, the S&P 500 index closed at its lowest level of the current quarter with a decline for the week of nearly 3%. The same index has fallen nearly 6% since its highest close of the year on July 31.
What is behind the multi-week decline?
If we step back and look at the year overall, investor sentiment has largely remained upbeat. Financial markets have rebounded from their 2022 sell-off, with the S&P 500 gaining more than 14% (inclusive of the most recent decline) and credit spreads have tightened.
The U.S. consumer continues to be supported by low unemployment and wage growth, and while data shows the rate of economic activity is slowing, it remains positive despite the rate hiking cycle. GDP growth has exceeded expectations, housing activity is rebounding despite elevated mortgage rates, and the industrial sector remains resilient as the government invests in infrastructure upgrades, renewable energy, and semiconductor production.
So, what has changed?
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