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US SPX 500: Q4 2021 Outlook

Following an uptrend in July and August, the US SPX 500 or the S&P 500 index declined through most of September. Despite this dip in the final month of the third quarter, the index has climbed more than 18% year to date and remained above the 4,400 support level. Moreover, the rally through the first nine months has been broad based. Also, despite the downturn in September, the index remained at a level significantly higher than what market analysts had projected at the beginning of the year.

Economic Data to Watch Out for in Q4 2021

October 5, 2021/ November 4, 2021/ December 7, 2021: US Balance of Trade

The US trade deficit shrank to $70 billion in July, but came in below the market expectations of a $71 billion gap. Exports grew 1.3% to $212.9 billion, recording the highest level since May 2019. Imports slipped 0.2% to $282.9 billion, after hitting a record high of $283.3 billion in the previous month. For August, analysts expect the country’s trade deficit to widen slightly to $70.4 billion.

October 8, 2021/ November 5, 2021/ December 3, 2021: Unemployment Rate

With the country’s labour market continuing to recover with the gradual reopening of the economy and businesses, the unemployment rate has been steadily easing. The unemployment rate fell to 5.2% in August, hitting the lowest level since March last year. Despite reports of labour shortage and concerns around the continued rise in covid-19 cases, the US unemployment rate is expected to ease further to 5.1% in September.

October 13, 2021/ November 25, 2021: FOMC Meeting Minutes

The US Federal Reserve is expected to begin tapering its asset purchases in the near term, with interest rates also likely to be hiked sooner than earlier anticipated, given the significant rebound in the economy. Markets await the release of minutes from upcoming FOMC meetings, which could shed some light on the expected timeline for both moves.

October 1, 2021/ November 1, 2021/ December 1, 2021: US Construction Spending

Construction spending in the US rose 0.3% month-over-month to an annual rate of $1.569 trillion in July, after recording no growth in the previous month. Analysts expect construction spending to rise 0.3% again in August.

October 13, 2021/ November 10, 2021/ December 10, 2021: US Core Inflation Rate

Core consumer prices in the US rose 4.0% in August, recording its smallest rise since May. The latest reading also came in below the consensus estimate of 4.2%, easing investor concerns around inflation accelerating as the economy recovers. Analysts expect the core CPI to rise 4% in September.

Q4 2021 Predictions: Other Factors That Could Impact the US SPX 500

The US SPX 500 comprises major companies that are poised to benefit from a faster recovery in the US economy. However, investors will continue to monitor the new covid-19 cases, with the country recording more than 100,000 daily new cases in September. This index has been the best performer year to date and experts are optimistic about the trend continuing in the fourth quarter.