The S&P 500 (SP500) on Thursday finished marginally lower by 0.10% at 4,105.02 points for the week shortened by vacation, registering gains in two sessions and losses in the other two. Your Companion SPDR S&P 500 Trust ETF (NYSEARCA:SPY) slipped 0.05% for the week.
the reference point The index snapped a streak of three successive weeks of gains by slightly underperforming as market participants seemed mostly uncommitted ahead of the non-farm payrolls report due on Good Friday.
Economic data during the week pointed to a cooling off in both industry and the labor market. It has raised concerns that the Federal Reserve’s rate hike campaign has been too aggressive and that a rapid downturn in the economy could lead to a recession.
Investors were looking at a larger-than-anticipated drop in the ISM Manufacturing Purchasing Managers’ Index and a larger-than-expected drop in a key indicator of economic activity in the services sector. The labor market was in the spotlight after the JOLTS report showed much lower-than-expected job openings, the ADP Private Payrolls report added less than expected, and the number of Americans filing initial jobless claims declined. .
Traders have been mostly in a risk-off mood, buying safe-haven stocks like utilities and other defensive sectors, along with other assets like bonds, which sent Treasury yields to multi-month lows and gold.
At the same time, inflation expectations have had to readjust somewhat after OPEC+ oil-producing nations including Saudi Arabia and Russia agreed to a surprise production cut last Sunday, triggering massive gains in the US. crude oil prices (CL1:COM) (CO1:COM) and a big jump in energy stocks. For the Fed, higher oil prices would mean higher inflation, putting pressure on them to keep rates high.
Speaking of rates, markets have continued to fluctuate in their expectations regarding the central bank’s move at its next monetary policy committee meeting in May. The chances have continued to swing back and forth in favor of no increase to a 25 basis point increase. According to the CME FedWatch tool, the odds are currently almost exactly 50/50.
“As investor sentiment shifts from a hard to a soft economic landing, from sticky inflation to lower inflation, and from believing the Fed will keep rates higher longer to the possibility of a reversal , the market has swung from bearish to bullish, Keith Lerner, Truist’s co-chief investment officer, said in a note Wednesday.
“The strength of mega-cap growth stocks has helped market performance this year, given their heavy weighting in market indices. However, market strength is less apparent below the surface, as only 36 % of stocks within the S&P 500 are outperforming the index itself over the past three months,” Lerner added.
As for the weekly performance of the S&P 500 (SP500) sectors, six ended in the red, led by Industrials and Consumer Discretionary. Defensive stalwarts Utilities and Healthcare led the gains, while the Energy sector also finished higher, helped mainly by the reaction to the OPEC+ production cut. See below for a breakdown of weekly sector performance, as well as the corresponding SPDR Select Sector ETFs from March 31 through April 6:
#1: Utilities +3.11%and the Utilities Select Sector SPDR ETF (XLU) +3.13%.
The electric utility subsector, which contributes 65% to the index, rose 3.08% and the multi-utility subsector, which contributes 29% to the index, rose 3.3%.
#2: Health Care +3.08%and the Select Health Care Sector SPDR ETF (XLV) +3.14%.
Pharmaceuticals, biotech and life sciences, which contribute 58% to the index, rose 2.8%, while healthcare services and equipment rose 3.49% for the week.
#3: Energy +3.03%and the Energy Select Sector SPDR ETF (XLE) +2.60%.
Oil, gas and consumable fuels, which contributes 91% to the index, is up 3.2%.
#4: Communication Services +2.33%and the Select Communication Services Sector (XLC) SPDR Fund +1.66%.
The Media & Entertainment subsector index, which contributes 85% to the index, rose 2.37% for the week.
#5: Consumer Staples +0.91%and the SPDR (XLP) Select Consumer Staples Sector ETF +0.87%.
Food, Beverages and Tobacco, which contributes 54% to the index, rose 0.95% for the week.
#6: Finances -0.65%and the SPDR Select Financials ETF (XLF) -0.50%.
Banks continue to drag the financial index lower, with the banking subsector index down 1.9% for the week. The diversified financial sector, which contributes 46% to the index, was also 0.7% lower; however, the 1.46% gain in the insurance subsector partially offset the losses in banks and the diversified financial sector.
#7: Real Estate -0.77%and the Real Estate Select Sector SPDR ETF (XLRE) -0.75%.
Sister sector equity Real Estate Investment Trusts (REITs) fell 0.7% for the week.
#8: Information Technology -1.15%and the Technology Select Sector SPDR ETF (XLK) -1.28%.
The Semiconductor and Semiconductor Equipment subsector took a hit losing 4% for the week, Hardware and Technology Equipment fell 0.7% partially offset by a 0.22% gain in Software and Services.
#9: Materials -1.26%and the SPDR Materials Select Sector ETF (XLB) -1.28%.
The chemical subsector, which contributes 68% to the index, is down 1% for the week.
#10: Consumer Discretionary -2.95%and the SPDR Consumer Discretionary Select Sector ETF (XLY) -3.08%.
The retail subsector, which accounts for just over 50% of the index, is down 1.26%.
#11: Industrial -3.37%and the Select Industrial Sector SPDR ETF (XLI) -3.37%.
The 4% drop in the Capital Goods subsector during the week dragged down industrial shares.
Below is a chart of the YTD performance of the 11 sectors and how they fared against the S&P 500.
