Friday’s S&P 500 Index (SP500) Down 0.51% It ended the week at 5,277.51, with two out of four trading days in the balance during a week shortened by the Memorial Day holiday. Its accompanying SPDR S&P 500 ETF Trust (New York Stock Exchange: Spy) dropped 0.39%.
The benchmark index posted its first weekly loss after five consecutive weeks of gains in the holiday-shortened week.
The S&P 500 is off last week’s closing high of 5,321.49. Investors have been assessing the shrinking prospects for a sharp rate cut by the Federal Reserve in 2024, as well as some bumps in an overall solid first-quarter earnings season. Shares of Salesforce (CRM) fell this week after the enterprise software giant’s first-quarter report and guidance fell short of Wall Street standards, while Dell (DELL) fell after it issued soft profit guidance.
The market received the April PCE inflation report on Friday, with the Fed’s official target – 12-month core PCE – holding steady at 2.8% since March. Chris Zaccarelli, chief investment officer at the Alliance of Independent Advisors, said in a note that the inflation data was in line with consensus expectations, but reported spending was slightly lower than expected.
“We’re in a ‘whatever’ moment, because if consumer spending slows and inflation falls, and the Fed is able to slowly lower interest rates as a result, then that would be good for the market,” Zaccarelli said. But “if consumer spending slows, that leads to lower inflation,” Zaccarelli said. If the economy slows down too fast, then corporate profits and stock prices will fall much faster than the rate at which the Federal Reserve cuts interest rates, so we will be careful at this point,” he said.
Stocks rose on Friday afternoon, managing to push the S&P 500 (SP500) and the blue-chip Dow Jones Industrial Average (DJI) to close the day higher. The tech-heavy Nasdaq (COMP:IND) fell but ended at its lowest level.
While the key index fell this week, it moved sharply higher in May, hitting a record high. The S&P 500 (SP500) rose 4.80%, its strongest month since February. The Nasdaq (COMP:IND) soared 6.88%, its largest gain since November 2023. 40,000 point mark.
Artificial intelligence chip maker Nvidia’s stock price soared 26.89% in May, becoming the month’s big winner. Investors welcomed the company’s first-quarter results, forward guidance and a 10-for-1 stock split that took effect in June.
Steve Sosnick, chief strategist at Interactive Brokers, said this week: “NVDA’s revenue and earnings performance may have been unprecedented, beating consensus, raising guidance, and then beating the raised guidance and then beating consensus.” Guidance has been raised again.
June trading starts next week. Investors will be watching the U.S. jobs report for May and an expected rate cut from the European Central Bank to begin its rate-cutting cycle. Nvidia’s (NVDA) 10-for-1 stock split will take effect later Friday, with shares starting to trade on a split-adjusted basis on Monday, June 10.
As for the weekly performance of the S&P 500 (SP500), 6 out of 11 sectors were in positive territory. Energy and real estate were the top gainers, each rising about 2%. Healthcare, industrials and technology declined. See below a breakdown of the performance of each sector and its accompanying SPDR Select Sector ETF from May 24 to the close of May 31:
- #1: Energy +2.01%Energy Select Sector SPDR Fund ETF (XLE) +2.00%.
- #2: Real Estate +1.80%, and Real Estate Select Sector SPDR Fund ETF (XLRE) +1.87%.
- #3: Utilities +1.62%and the Utilities Select Sector SPDR Fund ETF (XLU) +1.71%.
- #4: Consumer Staples +0.09%and the Consumer Staples Select Sector SPDR Fund ETF (XLP) +0.31%.
- #5: Materials +0.08%and the Materials Select Sector SPDR Fund ETF (XLB) +0.19%.
- #6: Finance +0.05%and the Financial Select Sector SPDR Fund ETF (XLF) +0.07%.
- #7: Consumer Discretionary -0.31%and the Consumer Discretionary Select Sector SPDR ETF (XLY) -0.42% .
- #8: Healthcare -0.58%and the Healthcare Select Sector SPDR Fund ETF (XLV) -0.49%.
- #9: Communication Services -0.60%while the Communications Services Select Sector SPDR Fund (XLC) +0.37%.
- #10: Industrial -0.84%and the Industrial Select Sector SPDR Fund ETF (XLI) -0.76%.
- #11: Information Technology -1.46%and Technology Select Sector SPDR Fund ETF (XLK) -2.33%.
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