S&P 500 (SP500) Friday Jumped 3.93% The index ended the week at 5,554.25 points, posting gains in four of the last five sessions. SPDR S&P 500 ETF Trust (New York: Spy) Added 3.99% For this week.
What a difference a week makes! Wall Street’s benchmark index The index posted its best weekly advance since late October last year. It also snapped a four-week losing streak and is now just 2% below its record close.
Since what became known as “Black Monday 2024” on August 5, the day the S&P 500 dropped 3%, the recovery has been well underway. A slew of data indicators released this week continued to ease fears of an economic slowdown and gave investors confidence to return to growth areas. The S&P 500’s information technology sector rose 7.51%, its best weekly gain since early November 2022.
Markets were already headed higher at the start of the week, after the Aug. 8 initial jobless claims reading showed their biggest weekly drop since September of last year. That helped ease recession fears after the July jobs report sparked widespread concerns about the health of the economy earlier this month.
This week, data on inflation and retail sales, along with upbeat comments from retail giant Walmart (WMT), helped boost sentiment further.
“This week’s economic calendar has been eventful. A quick look across the board suggests that recession fears may be overblown. Inflation continues to ease, and business optimism has turned higher amid slower input price growth and stabilizing consumer spending,” Wells Fargo said.
“While the growth picture looks solid, the debate over the degree of monetary policy easing this year is unlikely to be resolved until we get more clarity on the labor market with next week’s initial payrolls benchmark review and the August jobs report,” Wells Fargo added.
Amid favorable economic data this week, market participants have tempered their expectations for a 50 basis point rate cut by the Federal Reserve at its September meeting. According to CME Fed, the odds of a smaller 25 basis point rate cut are 72.5%.
While Walmart (WMT) made headlines, there were several other big names reporting results this week as well, including:
- Home Depot Inc. (HD), the largest home improvement retailer, expects a larger decline in comparable annual sales than previously forecast.
- Networking giant Cisco (CSCO) reported a profit beat, a 7% cut in its workforce and a shift in its business focus.
- Deere (DE), the world’s largest manufacturer of agricultural equipment and machinery, reaffirmed its full-year net income outlook.
- Applied Materials Inc. (AMAT), the largest U.S. semiconductor equipment maker, reported results showing slowing demand in China.
This week also saw the filing of Form 13F filings – regulatory disclosures by large funds regarding quarterly share ownership changes, the deadline for which was Wednesday.
Among the notable moves, Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) unveiled a new stake in Ulta Beauty (ULTA), sending the cosmetics retailer’s shares higher. Meanwhile, Bill Ackman’s Pershing Square Capital Management unveiled a new stake in Nike (NKE), after research firm Gordon Haskett speculated that the shoe giant could be the next target for activist investors.
Moving to the weekly performance of the S&P 500 sectors, all 11 sectors ended lower. Information Technology easily led the pack, up +7%. Consumer Discretionary was second, up +5%. Real Estate and Energy were the least profitable sectors. Here’s a breakdown of the sector performance and their associated SPDR Select Sector ETFs from the close of August 9 to the close of August 16:
#1: Information Technology +7.51%and the Technology Select Sector SPDR Fund (XLK) +7.67%.
#2: Discretionary Consumer Goods +5.21%and the Consumer Discretionary Select Sector SPDR Fund (XLY) +5.04%.
#3: Financial Affairs +3.21%and the Select Financial Sector SPDR Fund (XLF) +3.23%.
#4: Materials +2.23%and Materials Select Sector SPDR Fund (XLB) +2.27%.
#5: Industries +2.12%and the Select Industrials SPDR Fund (XLI) +2.16%.
#6: Health Care +1.92%and the Healthcare Select Sector SPDR Fund (XLV) +1.93%.
#7: Consumer Staples +1.60%and the Consumer Staples Select Sector SPDR Fund (XLP) +1.72%.
#8: Communication Services +1.00%and the Select Communications Sector SPDR Fund (XLC) +1.23%.
#9: Energy +1.85%and the Select Energy Sector SPDR Fund (XLE) +1.19%.
#10: Facilities +0.97%and the Select Utilities Sector SPDR Fund (XLU) +1.13%.
#11: Real Estate +0.07%and the SPDR Real Estate Select Sector Fund (XLRE) +0.12%.
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