The S&P 500 (SP500) on Friday added 1.54% for the week to end at 5,303.27 points, posting gains in three out of five sessions. Its accompanying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) climbed 1.65% for the week.
A week with consumer inflation data has turned into an event, and the last five days did not disappoint – it was records galore on Wall Street! In a historic first for both indexes, the benchmark S&P (SP500) scaled 5,300 points and the blue-chip Dow Jones Industrial Average (DJI) surpassed 40,000 points. The S&P (SP500) is now on a four-week win streak, its longest such run since early February.
Undoubtedly, the showstopper of the week was the consumer price index (CPI) report on Tuesday. But things were heating up before that as well. On Monday, producer inflation data showed a bigger-than-anticipated jump in both the headline and core April producer price index (PPI). However, markets focused on the fact that the advance was largely driven by a rise in the index for portfolio management and that the numbers for March were revised lower.
On Wednesday, the CPI report showed a 0.3% M/M increase in the headline figure, a shade lower than the expected +0.4%. Moreover, core CPI, which excludes food and energy, cooled for the first time since October 2023. Markets were off to the races after the data, and the S&P (SP500) crossed and ended above 5,300 points for the first time ever.
“CPI analysis, in short: #1 – Things not getting worse; #2 – Still far from the Fed’s target; #3 – Weaker economic data needed; #4 – For markets, all that matters is #1,” Marc-André Fongern, senior associate at Goldman Sachs, said on X (formerly Twitter).
“Let’s be honest here: There are reasons to start cutting rates, and there are reasons not to do so yet; we’re in a macroeconomic no-man’s land right now where guesswork prevails over clarity; so if you’re feeling confused, don’t worry, so are central bankers,” he said.
“Let’s get real: Even if things start going south starting Monday, the fact that stocks are trading at record highs in spite of what feels like 5250 bps of rate hikes is simply mind-boggling,” Fongern added.
On Thursday, the post-CPI euphoria extended into morning trade. That, along with a quarterly report from U.S. retail giant and Dow 30 component Walmart (WMT) that dazzled investors, was enough to push the Dow (DJI) above the 40K level. It took Wall Street’s most venerable index 873 trading days to reach that mark since it first crossed 30,000 in late November 2020. Also see – Dow at 40K: Leaders and laggards over the last 10,000 points.
Among other notable events this week, so-called meme stocks returned to the spotlight. Videogame retailer GameStop (GME) witnessed a staggering 179.2% gain over Monday and Tuesday, an advance that wiped off more than $2B on paper for short sellers betting against the stock.
The epic squeeze brought back memories of 2021, and the action was sparked or at least fanned by none other than retail investor Keith Gill, known online as Roaring Kitty, who had been one of the instrumental players in the saga three years ago. Read a timeline of the developments.
Turning to the weekly performance of the S&P 500 (SP500) sectors, 9 of the eleven ended in the green. Technology topped the leaderboard with a nearly 3% climb, driven by a strong performance in the “Magnificent 7” club ahead of chip giant Nvidia’s (NVDA) hotly anticipated quarterly results next week. Industrials and Consumer Discretionary were the two weekly losers.
See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from May 10 close to May 17 close:
#1: Information Technology +2.90%, and the Technology Select Sector SPDR Fund ETF (XLK) +3.06%.
#2: Real Estate +2.53%, and the Real Estate Select Sector SPDR Fund ETF (XLRE) +2.51%.
#3: Health Care +1.84%, and the Health Care Select Sector SPDR Fund ETF (XLV) +1.89%.
#4: Communication Services +1.70%, and the Communication Services Select Sector SPDR Fund (XLC) +1.00%.
#5: Financials +1.37%, and the Financial Select Sector SPDR Fund ETF (XLF) +1.58%.
#6: Utilities +1.24%, and the Utilities Select Sector SPDR Fund ETF (XLU) +1.50%.
#7: Consumer Staples +0.74%, and the Consumer Staples Select Sector SPDR Fund ETF (XLP) +0.76%.
#8: Energy +0.73%, and the Energy Select Sector SPDR Fund ETF (XLE) +1.20%.
#9: Materials +0.27%, and the Materials Select Sector SPDR Fund ETF (XLB) +0.34%.
#10: Consumer Discretionary -0.05%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +0.34%.
#11: Industrials -0.36%, and the Industrial Select Sector SPDR Fund ETF (XLI) -0.28%.
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.
