The S&P 500 (SP500) on Friday surged 4.02% for the week to end at 5,626.02 points, posting gains in all five sessions. Its accompanying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) climbed 4.01% for the week.
The bulls charged back onto Wall Street this week, helping the benchmark index rebound from its worst week of the year to post its best week of the year. It was actually the S&P’s (SP500) best week since the end of October 2023.
“The last time (the S&P 500) fell at least 4% in one week and then rallied more than 4% the next was in June 2022,” Bespoke Investment Group noted on X (formerly Twitter).
Last week’s selloff was driven by concerns over economic growth after a slew of soft data, especially on the labor market. That, coupled with historical September weakness, led to investors pulling out of growth sectors such as Technology and flocking to the safety of assets such as bonds.
The narrative reversed this week after market participants received inflation data that strongly reinforced expectations of a Federal Reserve interest rate cut next Wednesday. The only question now is, how much will be the size of the cut?
The consumer price index (CPI) report for August released on Wednesday showed the headline number cooling on a Y/Y basis. The headline producer price index (PPI) on Thursday also decelerated on a Y/Y basis. The core CPI and PPI came in a tad higher than anticipated.
“Last week’s employment report offered a little bit of something for both doves and hawks speculating on the outcome of next week’s Fed meeting. An acceleration in hiring in August coupled with downward revisions to prior data left the door open to either a 25 bps or 50 bps cut in September. Inflation data out this week lent a bit more clarity,” Wells Fargo said.
“The (core CPI) printed at 0.3% month-over-month in August. This was slightly higher than consensus forecasts and marked the fastest price increase in four months … Although August’s inflationary burst was more likely a volatile pop than a trend shift, the sticky nature of price growth may prompt FOMC members to exercise a bit more caution on the way down,” Wells Fargo added.
Another notable event this week was the second U.S. presidential debate between Democratic nominee and current Vice President Kamala Harris and Republican nominee and the former leader of the country Donald Trump. The candidates sparred over various topics, and the consensus later was that Harris won the debate.
Turning to the weekly performance of the S&P 500 (SP500) sectors, all 11 except for Energy ended in the green. Technology added a stunning +7%, while fellow growth sectors Consumer Discretionary and Communication Services rounded out the top three gainers. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from September 6 close to September 13 close:
#1: Information Technology +7.33%, and the Technology Select Sector SPDR Fund ETF (XLK) +8.10%.
#2: Consumer Discretionary +6.14%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +5.53%.
#3: Communication Services +4.27%, and the Communication Services Select Sector SPDR Fund (XLC) +3.70%.
#4: Industrials +3.70%, and the Industrial Select Sector SPDR Fund ETF (XLI) +3.72%.
#5: Real Estate +3.41%, and the Real Estate Select Sector SPDR Fund ETF (XLRE) +3.62%.
#6: Utilities +3.38%, and the Utilities Select Sector SPDR Fund ETF (XLU) +3.46%.
#7: Materials +3.16%, and the Materials Select Sector SPDR Fund ETF (XLB) +3.11%.
#8: Health Care +1.44%, and the Health Care Select Sector SPDR Fund ETF (XLV) +1.44%.
#9: Consumer Staples +1.11%, and the Consumer Staples Select Sector SPDR Fund ETF (XLP) +1.13%.
#10: Financials +0.48%, and the Financial Select Sector SPDR Fund ETF (XLF) +0.50%.
#11: Energy -0.74%, and the Energy Select Sector SPDR Fund ETF (XLE) -0.49%.
For investors looking to track the benchmark S&P 500 (SP500), here are some exchange-traded funds of interest: (VOO), (IVV), (RSP), (SSO), (UPRO), (SH), (SDS), and (SPXU).
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.
