The S&P 500 (SP500) on Friday added 1.43% so that the week ends at 3,916.64 points, registering losses in three of the five sessions. Your Companion SPDR S&P 500 Trust ETF (NYSEARCA:SPY) increased 1.06% for the week.
the reference point The index advance came amid the worst financial crisis in 14 1/2 years. During the week, two regional US banks – Signature Bank (sbny) and SVB Financial (BLIMS) Silicon Valley Bank: were acquired by US regulators due to liquidity problems.
Meanwhile, major banks including JPMorgan (JPM) and Bank of America (BAC) have banded together and pledged $30 billion in deposits to another embattled regional bank, First Republic Bank (FRC), after depositors fled to get your money. The Federal Reserve and the government have been quick to allay fears about instability in the financial system by announcing measures to support banks.
The banking crisis also reached Europe. Switzerland’s second-largest bank, Credit Suisse (CS), has revealed “material weaknesses” in its reporting procedures, prompting its largest shareholder to rule out providing further financial assistance to the bank. The news caused a setback in the shares of the credit institution. The Swiss central bank stepped in, saying it would provide the bank with a $54 billion lifeline.
The events have caused traders to exit financial stocks during the week and seize safe haven assets like bonds and gold, while also pouring money into technology stocks, which has helped boost the S&P 500 (SP500). The tech-heavy Nasdaq Composite (COMP.IND) gained more than 4% for the week.
The weekly gain in the benchmark S&P index was also boosted by the recalibration of expectations toward a 25 basis point rate hike by the Federal Reserve at its two-day meeting of the monetary policy committee that began on Tuesday. . Investors are betting that the central bank would not be willing to raise rates by a larger amount in light of the turmoil in the financial sector.
The readjustment in the Fed’s rate expectations has also been triggered by economic data that has shown a moderation in inflation. The consumer price index for February increased, but at a slower rate than in January, while the producer price index unexpectedly fell.
“We expect the FOMC to rise 25bps next week, taking the funds rate target range to 4.75-5.0%,” JPMorgan’s Michael Feroli said in a preliminary note.
“The press conference will become more important next week. We expect (Fed Chairman) Powell to prioritize economic developments and the fight against inflation. Of course, he will have to spend considerable time discussing the stress of the system banking and the Fed’s response. But I think it will distinguish monetary policy decisions from financial stability actions,” Feroli added.
As for the weekly performance of the S&P 500 (SP500) sectors, seven finished in the green, led by the heavyweight Communications Services and Technology sectors. Energy was the biggest loser as oil prices plunged amid the flight to safe haven. Finance fell 6%. See below for a breakdown of weekly sector performance, as well as the corresponding SPDR Select Sector ETFs from the March 10 close to the March 17 close:
#1: Communication Services +6.94%and the Select Communication Services Sector (XLC) SPDR Fund +5.26%.
#2: Information Technology +5.66%and the Technology Select Sector SPDR ETF (XLK) +5.66%.
#3: Utilities +3.90%and the Utilities Select Sector SPDR ETF (XLU) +3.96%.
#4: Consumer Discretionary +2.35%and the Select Sector Consumer Discretionary SPDR ETF (XLY) +2.27%.
#5: Health Care +1.31%and the Select Health Care Sector SPDR ETF (XLV) +1.38%.
#6: Consumer Staples +1.41%and the SPDR (XLP) Select Consumer Staples Sector ETF +1.41%.
#7: Real Estate +0.08%and the Real Estate Select Sector SPDR ETF (XLRE) +0.36%.
#8: Industrial -2.45%and the Select Industrial Sector SPDR ETF (XLI) -2.35%.
#9: Materials -3.51%and the SPDR Materials Select Sector ETF (XLB) -3.42%.
#10: Finance -6.09%and the SPDR Select Financials ETF (XLF) -5.92%.
#11: Energy -7.02%and the Energy Select Sector SPDR ETF (XLE) -6.85%.
Below is a chart of the YTD performance of the 11 sectors and how they fared against the S&P 500. For investors looking ahead of what’s going on, take a look at Seeking Alpha Catalyst Watch for a breakdown of the actionable events of the coming week that stand out. .
