The S&P 500 (SP500) on Friday jumped 3.93% for the week to end at 5,554.25 points, posting gains in four out of five sessions. Its accompanying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) added 3.99% for the week.
What a difference a week makes! Wall Street’s benchmark index charged to its best weekly advance since late October last year. The gauge also snapped a four-week losing streak, and is now just 2% below its record close.
Since what has become known as “Black Monday 2024” on August 5, a day when the S&P (SP500) cratered 3%, the rebound has been well and truly on. A host of data indicators released this week continued to quell economic slowdown fears and gave investors the confidence to dive back into growth areas. The S&P 500 Information Technology sector surged 7.51%, its best weekly gain since early November 2022.
Markets were already trending upward going into this week, following August 8’s reading on initial jobless claims, which showed their largest weekly decline since September last year. That had helped becalm recession jitters after the July jobs report sparked widespread concern over the health of the economy earlier this month.
This week, data on inflation and retail sales, along with upbeat comments from retail giant and consumer bellwether Walmart (WMT), further invigorated sentiment.
“The economic calendar was packed this week. A quick look across the board suggests recession jitters may be overdone. Inflation continues its gradual descent, and business optimism has trended higher amid cooler input price growth and steady consumer spending,” Wells Fargo said.
“While the growth picture appears solid, it is unlikely to settle the debate on the degree of monetary policy easing this year until we get more clarity on the labor market with next week’s preliminary payroll benchmark revision and August’s jobs report,” Wells Fargo added.
With the favorable economic data this week, market participants have dialed back their expectations for an aggressive 50 basis point rate cut by the Federal Reserve at its meeting in September. According to the CME Fed, the odds of a smaller 25 basis point cut are at 72.5%.
While Walmart (WMT) grabbed headlines, there were several other major names that reported their results this week as well, including:
- Top home improvement retailer Home Depot (HD) expects a greater fall in annual comparable sales than previously anticipated.
- Networking giant Cisco (CSCO) reported an earnings beat, a 7% reduction in workforce and a shift in its business focus.
- Deere (DE), the world’s largest manufacturer of agricultural equipment and machinery, reaffirmed its full-year net income outlook.
- Applied Materials (AMAT), the biggest U.S. semiconductor equipment maker, announced results that showed a moderation in China demand.
This week also saw 13F filings – regulatory disclosures by major funds of their quarterly equity ownership changes, the deadline for which was Wednesday.
Among notable moves, Warren Buffett’s Berkshire Hathaway (BRK.A)(BRK.B) disclosed a new stake in Ulta Beauty (ULTA), sending the beauty retailer’s stock soaring. Meanwhile, Bill Ackman’s Pershing Square Capital Management revealed a new stake in Nike (NKE), after research firm Gordon Haskett speculated that the shoe giant could be the next target for activist investors.
Turning to the weekly performance of the S&P 500 (SP500) sectors, all 11 ended in the red. Information Technology easily topped the leaderboard with its +7% rise. Consumer Discretionary came in second, climbing +5%. Real Estate and Energy gained the least. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from August 9 close to August 16 close:
#1: Information Technology +7.51%, and the Technology Select Sector SPDR Fund ETF (XLK) +7.67%.
#2: Consumer Discretionary +5.21%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +5.04%.
#3: Financials +3.21%, and the Financial Select Sector SPDR Fund ETF (XLF) +3.23%.
#4: Materials +2.23%, and the Materials Select Sector SPDR Fund ETF (XLB) +2.27%.
#5: Industrials +2.12%, and the Industrial Select Sector SPDR Fund ETF (XLI) +2.16%.
#6: Health Care +1.92%, and the Health Care Select Sector SPDR Fund ETF (XLV) +1.93%.
#7: Consumer Staples +1.60%, and the Consumer Staples Select Sector SPDR Fund ETF (XLP) +1.72%.
#8: Communication Services +1.00%, and the Communication Services Select Sector SPDR Fund (XLC) +1.23%.
#9: Energy +1.85%, and the Energy Select Sector SPDR Fund ETF (XLE) +1.19%.
#10: Utilities +0.97%, and the Utilities Select Sector SPDR Fund ETF (XLU) +1.13%.
#11: Real Estate +0.07%, and the Real Estate Select Sector SPDR Fund ETF (XLRE) +0.12%.
For investors looking into the future of what’s happening, take a look at the Seeking Alpha Catalyst Watch to see next week’s breakdown of actionable events that stand out.
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