The S&P 500 (SP500) on Friday advanced 1.06% for the week to end at a 4,890.97 points, posting gains in four out of five sessions. Its accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) added 1.03% for the week.
The benchmark index scaled a new record intraday and closing high last Friday, just over two years after setting the previous marks. This week, the average built upon that breakthrough on the back of a continued advance in technology stocks and favorable economic data.
The S&P 500’s (SP500) all-time intraday peak is now 4,906.69 points, set on Friday, while its record closing high is 4,894.16 points, set on Thursday.
Technology names continued to do a chunk of the heavy lifting for markets this week, as they have done for the most part of 2024. Communication services stocks in particular saw a big jump on the back of a post-earnings gain in Dow 30 component Verizon (VZ) and Netflix (NFLX).
Verizon (VZ) delivered a fifth consecutive quarter of more than 400K total broadband net additions. Meanwhile, the streaming giant turned in its best quarterly subscriber growth performance since the COVID-19 pandemic. Moreover, Netflix’s (NFLX) fellow members of the “Magnificent 7” club – Google-parent Alphabet (GOOG) (GOOGL), Facebook-owner Meta Platforms (META) and Microsoft (MSFT) – all hit record highs during the week.
Also giving a boost to technology stocks was a surge in IBM (IBM) following the legacy tech firm’s stronger-than-expected revenue guidance. These moves helped counter a plunge in shares of Tesla (TSLA) and Intel (INTC). The former warned of a notably lower vehicle volume growth rate in 2024, while the latter disappointed investors.
There were quarterly numbers from several other major names this week, including 3M (MMM), General Electric (GE), Johnson & Johnson (JNJ), United Airlines (UAL), American Airlines (AAL), Procter & Gamble (PG), DuPont (DD), Comcast (CMCSA) and Humana (HUM). Next week the earnings season will see one of its busiest stretches with reports from names such as Apple (AAPL) and Amazon (AMZN).
Aside from the advance in technology stocks, markets gained this week due to positive sentiment following some economic data. On Thursday, a report showed that U.S. Q4 GDP growth rose at a faster-than-expected clip, but moderating from Q3. On Friday, the core personal consumption expenditures price index – the Federal Reserve’s preferred inflation gauge – came in-line with estimates for December 2023.
Both economic indicators showed that the Fed was on track to deliver a soft landing – i.e. a scenario where inflation falls while the economy remains resilient. However, markets have dialed back their expectations of interest rate cuts by the central bank at its March monetary policy committee meeting. Speaking of policy meetings, the Fed’s first one of the year is next week.
“We think Fed officials have probably seen enough progress on inflation that they can officially drop their bias to tighten further. However, we think it’s too soon for them to communicate that they are preparing to loosen policy,” JPMorgan’s Michael Feroli said.
“Fed leaders have stated a desire to be confident that inflation is on course to sustainably return to 2% before they cut rates. The one missing piece that would give them such confidence is a softer labor market,” Feroli added.
Turning to the weekly performance of the S&P 500 (SP500) sectors, eight ended in the green. Energy led with a +5% rise, while Communication Services added more than 4%. Financials rounded out the top three gainers. Consumer Discretionary, Real Estate and Health Care were the three losers. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from January 19 close to January 26 close:
#1: Energy +5.15%, and the Energy Select Sector SPDR ETF (XLE) +5.09%.
#2: Communication Services +4.52%, and the Communication Services Select Sector SPDR Fund (XLC) +3.81%.
#3: Financials +1.88%, and the Financial Select Sector SPDR ETF (XLF) +1.90%.
#4: Information Technology +0.93%, and the Technology Select Sector SPDR ETF (XLK) +0.79%.
#5: Industrials +0.87%, and the Industrial Select Sector SPDR ETF (XLI) +0.87%.
#6: Consumer Staples +0.83%, and the Consumer Staples Select Sector SPDR ETF (XLP) +0.80%.
#7: Utilities +0.42%, and the Utilities Select Sector SPDR ETF (XLU) +0.38%.
#8: Materials +0.29%, and the Materials Select Sector SPDR ETF (XLB) +0.34%.
#9: Health Care -0.23%, and the Health Care Select Sector SPDR ETF (XLV) -0.14%.
#10: Real Estate -0.51%, and the Real Estate Select Sector SPDR ETF (XLRE) -0.54%.
#11: Consumer Discretionary -1.40%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) -1.84%.
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.
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