The S&P 500 (SP500) on Friday advanced 1.95% for the holiday-shortened week to end at 5,567.19 points, posting gains in all four sessions. Its accompanying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) added 1.86% for the week.
Wall Street’s benchmark index kicked off H2 2024 with its best weekly performance since late April. Remarkably, the gauge is now within striking distance of the 5,600 level, and is close to topping the year-end target of several brokerages who have scrambled to keep up with the inexorable bull run.
This week’s gains were largely driven by labor market data that has supported the case for Federal Reserve interest rate cuts; some dovish commentary from Fed chair Jerome Powell and the minutes of the central bank’s last monetary policy meeting; and electric vehicle giant Tesla (TSLA) rediscovering some of its mojo.
Market participants also saw a mid-week break with Independence Day falling on Thursday.
Fed chief Powell took the stage at an annual event organized by the European Central Bank (ECB) on Tuesday, speaking on a panel alongside ECB President Christine Lagarde and Banco Central do Brasil Governor Roberto Campos Neto. The U.S. central bank leader said recent data was now showing sings of resuming a “disinflationary trend.”
Also on Tuesday, Tesla (TSLA) stock added nearly $70B in market capitalization after the Elon Musk-led firm beat consensus estimates on quarterly deliveries.
Wednesday’s truncated trading session saw the economic calendar grab the spotlight. In particular, the following two indicators on the labor market received some attention: ADP Research Institute’s update for June showed job creation among private employers slowing for a third straight month, and continuing jobless claims climbed for a ninth consecutive week to continue hovering near its highest level since November 2021.
The labor market data culminated in Friday’s closely watched nonfarm payrolls report. According to the U.S. Bureau of Labor Statistics, jobs growth slowed in June, while the number for May was also revised lower. Additionally, the unemployment rate ticked up to 4.1% from 4.0%.
Along with inflation, a highly resilient labor market has been one of the main reasons why the Fed has held interest rates steady and has been hesitant to start easing monetary policy. But this week’s developments have bolstered market expectations for a 25 basis point rate cut to be delivered as soon as September.
Inflation will be back in focus next week, with the latest consumer and producer price index reports. Eyes will also be on Fed chair Powell as he heads to Congress to deliver his semiannual report on monetary policy. Finally, the second quarter earnings season will kick off with major banks reporting next Friday.
Turning to the weekly performance of the S&P 500 (SP500) sectors, six of the 11 ended in the green. Heavyweight growth names Communication Services, Technology and Consumer Discretionary led the winners with gains of nearly 4% each. Energy topped the losers. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from June 28 close to July 5 close:
#1: Communication Services +3.91%, and the Communication Services Select Sector SPDR Fund (XLC) +2.45%.
#2: Information Technology +3.85%, and the Technology Select Sector SPDR Fund ETF (XLK) +2.94%.
#3: Consumer Discretionary +3.75%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +3.78%.
#4: Consumer Staples +1.03%, and the Consumer Staples Select Sector SPDR Fund ETF (XLP) +1.04%.
#5: Financials +0.93%, and the Financial Select Sector SPDR Fund ETF (XLF) +1.05%.
#6: Utilities +0.56%, and the Utilities Select Sector SPDR Fund ETF (XLU) +0.60%.
#7: Real Estate -0.32%, and the Real Estate Select Sector SPDR Fund ETF (XLRE) -0.29%.
#8: Materials -0.46%, and the Materials Select Sector SPDR Fund ETF (XLB) -0.46%.
#9: Industrials -0.56%, and the Industrial Select Sector SPDR Fund ETF (XLI) -0.53%.
#10: Health Care -0.96%, and the Health Care Select Sector SPDR Fund ETF (XLV) -0.92%.
#11: Energy -1.27%, and the Energy Select Sector SPDR Fund ETF (XLE) -1.15%.
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.