Friday’s S&P 500 Index (SP500) Add 1.85% It closed the week at 5,222.68, rising in four of five trading days. Its accompanying SPDR S&P 500 ETF Trust (New York Stock Exchange: Spy) up 1.87% for the week.
Benchmark index gains for third straight week The increase has now almost erased all of April’s decline. The Wall Street Standard Index has gained 3.71% so far in May, rebounding strongly from 4.16% decline Last month, it went against the old adage of “sell in May and walk away.” S&P 500 Index (SP500) is currently only 0.61% away from the historical closing high of 5,254.35 points.
Following Friday’s lower-than-expected non-farm payrolls report, another labor market indicator showed signs of slowing this week. Data on Thursday showed initial jobless claims in the United States rose to the highest level in more than eight months in the past week. The elasticity of the labor market and sticky inflation have been one of the key factors preventing the Federal Reserve from cutting interest rates, and the initial jobless claims data is exactly what the Federal Reserve wants to see.
In addition, the interest rate decisions released by some European Central Banks this week are clearly different from the cautious “wait and see” tone of the Federal Reserve. On Wednesday, Sweden’s Riksbank cut its key policy interest rate for the first time since 2016, making Sweden the second major economy to initiate monetary policy easing after the Swiss National Bank in March. The Bank of England later kept its policy rate unchanged on Thursday, but Governor Andrew Bailey suggested policymakers could cut rates faster than markets expected.
In light of these developments, domestic market participants have slightly raised their expectations for a rate cut from the Federal Reserve. The odds of a 25 basis point rate cut in November have now increased to around 45% from around 42% last week, according to the CME FedWatch tool.
“The message from the most recent Fed speech was largely consistent with previous communications, as Fed officials generally view interest rates as restrictive and the biggest issue on the agenda is the decision to keep rates at current levels before eventually starting to lower them. How long. While easing remains the base case for the next move, some speakers are still signaling the possibility of a rate hike at some point in the future,” said Michael Feroli at JPMorgan.
All eyes are now on next Wednesday’s consumer inflation report. Economists and analysts expect core consumer prices to rise 0.3% quarter-on-quarter and 3.6% annually in April, with both indicators slowing from March.
Earnings season continues in full swing this week, with hundreds of companies reporting results. The most famous name is Walt Disney (DIS). The theme park and entertainment giant posted a surprising profit in its streaming business for the first time ever, but it was overshadowed by falling revenue from its traditional TV business.
Turning to the weekly performance of the S&P 500 (SP500), all 11 sectors closed in the green. Utilities stocks continued their recent hot streak, ranking first on the list for the second consecutive week, with gains of about 4%. The financial and materials industries ranked among the top three. See below for a breakdown of the performance of each sector and its accompanying SPDR Select Sector ETF from May 3 to the close of May 10:
#1: Utilities +4.03%and the Utilities Select Sector SPDR Fund ETF (XLU) +4.18%.
#2: Finance +3.07%and the Financial Select Sector SPDR Fund ETF (XLF) +3.16%.
#3: Materials +2.58%and the Materials Select Sector SPDR Fund ETF (XLB) +2.58%.
#4: Consumer Staples +2.30%and the Consumer Staples Select Sector SPDR Fund ETF (XLP) +2.29%.
#5: Industrial +2.30%and the Industrial Select Sector SPDR Fund ETF (XLI) +2.37%.
#6: Real Estate +2.03%and the Real Estate Select Sector SPDR Fund ETF (XLRE) +2.13%.
#7: Communication Services +2.02%and Communications Services Select Sector SPDR Fund (XLC) +1.97%.
#8: Healthcare +1.94%and the Healthcare Select Sector SPDR Fund ETF (XLV) +1.96%.
#9: Information Technology +1.41%and Technology Select Sector SPDR Fund ETF (XLK) +1.48%.
#10: Energy +1.36%and the Energy Select Sector SPDR Fund ETF (XLE) +1.36%.
#11: Consumer Discretionary +0.16%and the Consumer Discretionary Select Sector SPDR ETF (XLY) +0.11%.
For investors keeping an eye on future developments, check out Seeking Alpha Catalyst Watch for details on the actionable events that stand out next week.
