Standard & Poor's 500 (SP500) on Friday decreased by 0.51% The week ended at 5277.51 points, recording losses in two out of four sessions in the week shortened by the Memorial Day holiday. The accompanying SPDR S&P 500 ETF (NYSEARCA: SPY) Precipitation 0.39%.
In the holiday-shortened week, the benchmark index posted its first weekly decline after recording a five-week winning streak.
The S&P (SP500) is coming off a record closing high of 5,321.49 reached last week. Investors are weighing the prospects of diminished expectations for a massive round of interest rate cuts by the Federal Reserve in 2024 as well as some bumps in an overall strong first-quarter earnings season. This week, Salesforce (CRM) shares fell after the enterprise software giant's first-quarter report and guidance missed Wall Street marks and Dell (Dell) fell after issuing soft margin guidance.
Markets on Friday received the April PCE inflation report, with the Federal Reserve's official target – the core 12-month PCE rate – remaining steady at 2.8% since March. Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said in a note that the inflation data was in line with consensus estimates, but spending in the report was slightly lower than expected.
“We're in a moment of being careful about what you wish for because if a slowdown in consumer spending leads to lower inflation and the Fed can slowly cut as a result, that will be good for the markets,” Zaccarelli said. But “if consumer spending — and the economy — slows too quickly, corporate profits and stock prices will fall much faster than the Fed can lower interest rates, so we will be cautious at that point.”
Friday afternoon's stock rally succeeded in pushing the S&P 500 (SP500) and the blue-chip Dow Jones Index (DJI) to a positive end to the day. The technology-focused Nasdaq Composite (COMP:IND) fell but closed at its lowest level.
While major indexes fell this week, they rose in May to record highs. The S&P 500 (SP500) rose 4.80%, its strongest month since February. The Nasdaq Composite (COMP:IND) rose 6.88%, the biggest rise since November 2023. The Dow Jones Industrial Average (DJI) rose 2.30%, its best advance since December 2023. The average blue-chip stocks broke the 40K mark this the month.
Shares of artificial intelligence chip maker Nvidia (NVDA) rose 26.89% in May, the month's standout winner. Investors cheered the company's first-quarter results, future guidance and planning a 10-for-1 stock split starting in June.
“NVDA has posted an unprecedented streak of beating market consensus on revenue and earnings, raising its guidance, and then beating higher guidance and raising it again,” Steve Sosnick, chief strategist at Interactive Brokers, said this week.
June trading begins next week. Investors will await the US jobs report for May and the expected interest rate cut by the European Central Bank, which will start the interest rate easing cycle. Nvidia's (NVDA) 10-for-1 stock split will become effective late Friday, and shares will begin trading based on the adjusted split on Monday, June 10.
Turning to the weekly performance of the Standard & Poor's 500 (SP500) sectors, six of the 11 rose. Energy and real estate stocks were the top gainers, with each stock rising by about 2%. The healthcare, industrials and technology sectors declined. See below a breakdown of the performance of the sectors as well as their accompanying SPDR sector ETFs from May 24 through the May 31 close:
- No. 1: Energy +2.01%SPDR Energy Sector ETF (XLE) +2.00%.
- #2: Real estate +1.80%, SPDR Real Estate ETF (XLRE) +1.87%.
- #3: Facilities +1.62%Selected Utilities SPDR Fund ETF (XLU) +1.71%.
- #4: Consumer goods +0.09%Select Consumer Staples SPDR Fund ETF (XLP) +0.31%.
- No. 5: Materials +0.08%ETF Select Sector SPDR Fund (XLB) +0.19%.
- #6: Finance +0.05%SPDR Sector ETF (XLF) +0.07%.
- No. 7: Consumer Discretionary -0.31%Consumer Discretionary Sector SPDR ETF (XLY) -0.42%.
- #8: Healthcare -0.58%The Healthcare Select SPDR Fund ETF (XLV) -0.49%.
- #9: Communications services -0.60%while the Communications Services Sector SPDR Fund (XLC) +0.37%.
- #10: Industries -0.84%SPDR Industrial Sector ETF (XLI) -0.76%.
- #11: IT -1.46%SPDR Technology Sector ETF (XLK) -2.33%.
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