The S&P 500 (SP500) on Friday advanced 0.21% for the week to close at 4,604.37 points, posting losses in three out of five sessions. Its accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) added 0.24% for the week.
After a stunning November rally, markets took a bit of a breather at the start of this week, with the benchmark index posting a three-day losing streak from Monday to Wednesday. The advance resumed on Thursday, as overall sentiment has remained positive after favorable labor market data.
Jobs was the word for the week, as the market’s general consensus that the Federal Reserve is done hiking rates and can deliver a soft landing was strengthened by economic indicators that pointed to the gradual cooling in the labor market that the central bank wants to see.
Tuesday’s Job Openings and Labor Turnover Survey showed that job openings fell to their lowest level since March 2021. ADP’s latest employment report on Wednesday indicated that the private sector added lesser-than-expected jobs in November. On Thursday, the Department of Labor said that the number of Americans filing for initial jobless claims in the past week edged up.
Finally on Friday, November nonfarm payrolls came in higher-than-anticipated, though much of that rise was due to workers returning from strikes. However, the report did make market participants take a beat and slightly temper the rate cuts that they have aggressively priced in for as soon as March 2024.
“Today was clearly a strong jobs report. But keep in mind that what we are really seeing is a stabilizing labor market. Signs of slowing last month, rebounding a bit this month: this is what a strong but stable labor market looks like,” Betsey Stevenson, former Chief Economist of the U.S. Department of Labor, said on X (formerly Twitter).
Traders still widely expect the Fed to hold rates steady at next week’s monetary policy committee meeting. Close attention will also be paid to the central bank’s updated dot plot of economic and rate projections.
“The case for the Fed on hold this meeting is simple: various Fed speakers across the spectrum have recently indicated their support of that stance. Since nobody dissented in November it’s hard to see anyone dissenting next week,” JPMorgan’s Michael Feroli said in a preview note.
“At the (post decision) press conference we think (Fed chief) Powell will try to move the conversation away from the timing of the first ease by noting that currently the Committee is only considering whether they should stay on hold or tighten policy. We don’t think the Chair will be more emphatic than that, for example by saying they’re not even talking about talking about easing, as beyond the next few months he won’t have enough clarity to make a stronger statement,” Feroli added.
Major commodities were also in focus this week. Rate cut expectations have lured traders back to the bullion, with gold prices (XAUUSD:CUR) hovering near record levels after hitting an all-time high of $2,111.39/oz last Sunday. Meanwhile, WTI crude oil futures (CL1:COM) on Wednesday fell below $70 a barrel for the first time since early July on concerns surrounding oversupply and weak demand.
Turning to the weekly performance of the S&P 500 (SP500) sectors, six of the 11 ended in the green, led by Energy as oil prices fell. Consumer Discretionary was the top gainer. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from December 1 close to December 8 close:
#1: Communication Services +1.40%, and the Communication Services Select Sector SPDR Fund (XLC) +0.82%.
#2: Consumer Discretionary +1.14%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +1.23%.
#3: Information Technology +0.74%, and the Technology Select Sector SPDR ETF (XLK) +0.58%.
#4: Industrials +0.21%, and the Industrial Select Sector SPDR ETF (XLI) +0.20%.
#5: Health Care +0.20%, and the Health Care Select Sector SPDR ETF (XLV) +0.18%.
#6: Financials -0.11%, and the Financial Select Sector SPDR ETF (XLF) -0.11%.
#7: Utilities -0.30%, and the Utilities Select Sector SPDR ETF (XLU) -0.19%.
#8: Real Estate -0.40%, and the Real Estate Select Sector SPDR ETF (XLRE) -0.29%.
#9: Consumer Staples -1.24%, and the Consumer Staples Select Sector SPDR ETF (XLP) -1.18%.
#10: Materials -1.72%, and the Materials Select Sector SPDR ETF (XLB) -1.70%.
#11: Energy -3.28%, and the Energy Select Sector SPDR ETF (XLE) -3.28%.
Below is a chart of the 11 sectors’ YTD performance and how they fared against the S&P 500 (SP500). 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.