The S&P 500 Index (SP500) on Friday. advanced 2.29% for the week which ended at 5,234.18 points, recording gains in four out of five sessions. The related SPDR S&P 500 Trust ETF (NYSEARCA:SPY) added 2.23% for the week.
The benchmark index rose to its best weekly result 2024 performance and in the process broke a two-week losing streak. The indicator posted consecutive intraday records and closing highs on Wednesday and Thursday. The S&Ps (SP500) the other major averages also jumped, with the Dow (DJI) and the Nasdaq Composite (COMP:IND) posting their best and second best week of the year.
This week’s gains were almost entirely driven by the Federal Reserve’s latest monetary policy decision and the updated dot plot. The Fed held interest rates stable on Wednesday for the fifth consecutive meeting.
More importantly, Fed officials increased their growth projections in the dot plot, while reaffirming the expectation of three rate cuts in 2024. Fed Chair Jerome Powell in his post-decision press conference was much more accommodative than expected, and reiterated that it may be appropriate to probably start easing rates “at some point” this year.
Market participants were encouraged by the updated dot plot and Powell’s relaxed attitude towards hotter-than-expected inflation reports in January and February. With growth forecasts rising, hopes are now high that the Fed will be able to deliver a soft landing.
“Overall, the updated dot plot reflects an FOMC that believes inflation is on the way back to its 2% target, but that it will likely be reached slightly later than previously expected. The timing and degree The Fed’s easing measures continue to depend on how inflation and the labor market evolve in the coming months. We will have three months of inflation and employment data before the June 12 meeting, the first at which we expect the committee to will reduce the scope of its federal funds target,” Wells Fargo said in its weekly economic and financial commentary.
Wednesday’s Fed-led gains actually saw the benchmark S&P 500 (SP500) surpass the historic 5,200-point level for the first time ever. The index hit that level in late March, well ahead of year-end estimates of 5,200 set by several major brokerages and research firms.
To get a sense of the strength of Wednesday’s post-Fed advance, Bespoke Investment Group noted on X (formerly Twitter) that yesterday “saw a new high in new highs.”
“As shown in the chart, yesterday our reading of stocks hitting new 52-week highs in the S&P 500 (SP500) moved above the previous high from late last year,” Bespoke said.
While the Fed has largely dominated the headlines this week, a major event also occurred on Thursday in the form of the highly anticipated market debut of Reddit (RDDT). It was the largest initial public offering (IPO) by a social media company since 2019. The company’s Class A shares rose 48.4% on the day of their debut on the New York Stock Exchange, closing at $50.44 compared to the IPO price of $34 per share. giving the company a valuation of $8.02 billion.
We also saw some earnings reports from some big names this week: Chinese gaming giant Tencent (OTCPK:TCEHY) (OTCPK:TCTZF) reported a decline in quarterly revenue; Micron Technology’s (MU) earnings and guidance have led Wall Street to declare the memory chip maker as the next big beneficiary of artificial intelligence; the lead of yoga apparel maker Lululemon Athletica (LULU) and shoe giant Nike (NKE) has shaken up the apparel and footwear sectors; and global economic leader FedEx (FDX) impressed with results from the Express segment.
As for the weekly performance of the S&P 500 (SP500) sectors, all 11 closed in the green except for the real estate sector. The high-growth sectors, communications services and technology, posted the biggest gains, with the former jumping nearly 5% and the latter gaining about 3%. Below is a breakdown of the performance of the sectors and their associated SPDR Select Sector ETFs from the close of March 15th to the close of March 22nd:
No. 1: Communication services +4.78%and the SPDR Fund for the selected communications services sector (XLC) +3.19%.
No. 2: Information Technology +2.92%and the Technology Select Sector SPDR ETF (XLK) +2.09%.
No. 3: Industrials +2.89%and the Select Industrial Sector SPDR ETF (XLI) +2.59%.
#4: Consumer Discretionary +2.79%and the SPDR Consumer Discretionary Select Sector ETF (XLY) +2.62%.
No. 5: Financials +1.86%and the Financial Select Sector SPDR ETF (XLF) +1.47%.
#6: Energy +1.76%and the Energy Select Sector SPDR ETF (XLE) +0.88%.
#7: Utilities +1.45%and the SPDR ETF Utilities Select Sector ETF (XLU) +0.63%.
#8: Materials +0.98%and the Materials Select Sector SPDR ETF (XLB) +0.62%.
No. 9: Basic necessities +0.88%and the SPDR Select Sector Consumer Staples ETF (XLP) +0.15%.
#10: Healthcare +0.38%and the SPDR ETF Health Care Select Sector ETF (XLV) +0.06%.
#11: Real estate -0.44%and the Real Estate Select Sector SPDR ETF (XLRE) -1.08%.
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.