The S&P 500 (SP500) on Friday advanced 0.21% to close the week at 4,604.37 points, recording losses in three of five sessions. The accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) added 0.24% for the week.
After an impressive rally in November, markets took There was a bit of a respite earlier this week as the benchmark index posted a three-day losing streak from Monday to Wednesday. The advance resumed on Thursday as overall sentiment remained positive following favorable labor market data.
Employment was the word of the week, as the general market consensus that the Federal Reserve is done raising rates and can achieve a soft landing was strengthened by economic indicators that pointed to the gradual cooling in the labor market that the bank center wants to see.
Tuesday's Job Openings and Labor Turnover Survey showed job openings fell to their lowest level since March 2021. Wednesday's latest ADP jobs report indicated the private sector added fewer jobs than expected in November . On Thursday, the Labor Department said the number of Americans filing initial unemployment claims in the past week increased.
Finally, on Friday, November nonfarm payrolls were higher than expected, although much of that increase was due to workers returning from strikes. However, the report caused market participants to take a breath and slightly moderate the rate cuts they had aggressively priced in for as early as March 2024.
“Today was clearly a solid employment report. But you have to keep in mind that what we are really seeing is a stabilization of the labor market. Signs of slowdown last month, rebound a little this month – this is what a labor market looks like strong but stable.” Betsey Stevenson, former chief economist at the US Department of Labor, said on X (formerly Twitter).
Traders still widely expect the Federal Reserve to keep rates steady at next week's monetary policy committee meeting. Close attention will also be paid to the central bank's updated dot chart of economic and rate projections.
“The argument for the Fed to call off this meeting is simple: Several Fed spokespeople across the spectrum have recently indicated support for that stance. Since no one disagreed in November, it's hard to see anyone disagreeing next week. “JPMorgan's Michael Feroli said in a preview. note.
“At the press conference (after the decision) we believe that (Fed chief) Powell will try to divert the conversation from the timing of the first easing by pointing out that the Committee is currently only considering whether they should remain on hold or tighten policy. “I don't think the president is more emphatic than that, for example saying that they are not even talking about flexibility, since beyond the next few months he will not have enough clarity to make a more forceful statement,” Feroli added.
Major commodities were also in the spotlight this week. Expectations of rate cuts have drawn traders back into bullion, with gold (XAUUSD:CUR) prices hovering around record levels after hitting an all-time high of $2,111.39 an ounce last Sunday. Meanwhile, WTI crude oil futures (CL1:COM) fell below $70 a barrel on Wednesday for the first time since early July on concerns over oversupply and weak demand.
Looking at the weekly performance of the S&P 500 (SP500) sectors, six of the 11 finished in green, led by Energy due to the drop in oil prices. Discretionary consumption gained the most. See below for a breakdown of the performance of the sectors, as well as the accompanying SPDR Select Sector ETFs from December 1 through the December 8 close:
#1: Communication services +1.40%and the SPDR Fund of the Communications Services Select Sector (XLC) +0.82%.
#2: Consumer Discretionary +1.14%and the SPDR Consumer Discretionary Select Sector ETF (XLY) +1.23%.
#3: Information technology +0.74%and the technology Select Sector SPDR ETF (XLK) +0.58%.
#4: industrial +0.21%and the SPDR Industrial Select Sector ETF (XLI) +0.20%.
#5: healthcare +0.20%and the Healthcare Select Sector SPDR ETF (XLV) +0.18%.
#6: Finance -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 SPDR Select Sector Real Estate ETF (XLRE) -0.29%.
#9: Consumer Staples -1.24%and the SPDR Select Sector Consumer Staples 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 performance of the 11 sectors to date and their performance against the S&P 500 (SP500). For investors looking ahead to what's happening, take a look at Looking for Alpha Catalyst Watch to see the breakdown of actionable events highlighted next week.
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- S&P posts six-week winning streak following favorable labor market data; Dow and Nasdaq also rise
