The S&P 500 fell 2.2 percent last week.
Stocks fell amid concerns over persistent inflation and rising bond yields.
Federal Reserve Chair Jerome Powell said at a European Central Bank event on Wednesday that bottlenecks and supply chain problems are “holding up inflation longer than we had thought”.
Data released on Friday showed that the price index for core personal consumption expenditures in the US rose 3.6 percent year-on-year in August, the biggest increase in more than 30 years, while inflation in September in the euro area rose 3.4 percent on an annual basis, the highest reading since September 2008.
Over the weekend, Martin Farrer at the Guardian wrote that “a supply crunch that initially put a question mark over the availability of luxury cars or whether there would be enough PlayStations under our Christmas trees is instead morphing into a full-blown crisis featuring a shortage of energy, labour and transport from Liverpool to Los Angeles, and from Qingdao to Queensland”.
“The supply chain problems are much more persistent than most policymakers expected, although companies are less surprised,” said Mohamed El-Erian, an adviser to the insurance giant Allianz and president of Queens’ College, Cambridge. “Governments are having to rethink quickly because the three elements – supply side, transport, labour – are coming together to blow a stagflationary wind through the global economy.”
“Consumers are crazy to buy things because the world is awash with dollars from government stimulus, higher savings and pent-up demand,” said Flavio Romero Macau, a supply chain expert at Edith Cowan University in Western Australia. “Higher demand and restricted supply equals inflation: there’s no way out of it. You put all these things together and its a perfect storm.”
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