The S&P 500 Index (SP500) on Friday. retreated 1.56% for the week which ended at 5,123.41 points, recording losses in three out of five sessions. The related SPDR S&P 500 ETF Trust (NYSEARCA:SPY) fell by 1.46% for the week.
The benchmark index recorded its worst weekly result performance since late October last year, extending April’s losses to around 2.5%. He also recorded a two-week losing streak.
This week’s decline is mainly due to yet another warmer-than-expected consumer inflation report. After last week’s stronger-than-expected labor market data, traders and the Federal Reserve were both closely watching the consumer inflation report for clues about the future of monetary policy.
But on Wednesday, both the headline and headline consumer price index (CPI) for March rose more than expected on a M/M basis. On a y/y basis, core CPI moved further away from the Fed’s 2% inflation target.
Market participants reacted to the data by quickly closing the door on a 25 basis point rate cut at the Fed’s June monetary policy committee meeting, with the CME’s FedWatch tool showing a roughly 27% chance of that cut compared to a nearly 51% chance last time. week.
“March consumer price data have dominated the economic discussion this week and are the latest to argue that the timing and extent of Fed easing will be later and less than many of us previously expected We’re not at that point yet. We now expect the FOMC will not begin easing monetary policy until its September 18 meeting,” Wells Fargo said.
Wednesday’s dramatic sell-off in stocks and bonds stabilized largely on Thursday, especially after the latest producer inflation report came in colder than expected and, with notable intervention from the global central bank, the European Central Bank He signaled that a rate cut could be coming at his next meeting.
Stocks have also come under pressure this week from Treasury yields, which rose to their highest levels of 2024 following hot CPI data as investors dumped bonds. Yields recovered slightly on Thursday and Friday, but still ended with strong weekly gains.
Furthermore, geopolitical tensions in the Middle East this week also played a role in weakening sentiment for stocks. Numerous media reports of an imminent attack on Israel by Iran by Friday or Saturday sent market participants rushing to the relative safety of assets such as bonds and the dollar, and led to fluctuations in WTI crude oil futures ( CL1:COM).
Finally, Friday closed out the week by kicking off first-quarter earnings season with reports from major banks and asset managers. JPMorgan (JPM) disappointed Wall Street with weak annual guidance on net interest income, while Citi (C) reported strong results on both top and bottom lines and Wells Fargo’s (WFC) quarterly provision for credit losses ) was significantly lower than estimates.
Meanwhile, asset managers BlackRock (BLK) and State Street (STT) reported solid growth in assets under management.
As for the weekly performance of the S&P 500 (SP500) sectors, all 11 closed in the red. Rate-sensitive and defensive sectors such as finance, healthcare, materials and real estate fell more than 3% each, while technology posted a loss of just 0.2%. Below is a breakdown of the performance of the sectors and their associated SPDR Select Sector ETFs from the close of April 5th to the close of April 12th:
No. 1: Information Technology -0.22%and the Technology Select Sector SPDR Fund ETF (XLK) -0.50%.
No. 2: Communication Services -0.50%and the SPDR Fund for the selected communications services sector (XLC) -1.44%.
No. 3: Consumer Discretionary -0.68%and the SPDR Consumer Discretionary Select Sector ETF (XLY) -0.97%.
No. 4: Basic necessities -1.20%and the SPDR Select Sector Consumer Staples Fund ETF (XLP) -1.28%.
No. 5: Utilities -1.49%and the Utilities Select Sector SPDR Fund ETF (XLU) -1.47%.
#6: Energy -1.93%and the Energy Select Sector SPDR Fund ETF (XLE) -1.99%.
#7: Industrials -2.22%and the SPDR Industrial Select Sector Fund ETF (XLI) -2.20%.
No. 8: Real estate -3.06%and the Real Estate Select Sector SPDR Fund ETF (XLRE) -2.97%.
#9: Materials -3.10%and the Materials Select Sector SPDR Fund ETF (XLB) -3.07%.
#10: Healthcare -3.12%and the Health Care Select Sector SPDR Fund ETF (XLV) -3.01%.
#11: Financials -3.60%and the SPDR Financial Select Sector Fund ETF (XLF) -3.63%.
For investors looking ahead to what’s happening, check out the Seeking Alpha Catalyst Watch to see next week’s breakdown of actionable events that stand out.