The S&P 500 (SP500) on Friday added 0.03% for the week to end at 5,304.72 points, posting gains in three out of five sessions. Its accompanying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) was essentially unchanged for the week.
The benchmark index narrowly eked out a five-week win streak ahead of a three-day weekend on account of the Memorial Day holiday, its longest such run since early February.
However, the S&P (SP500) has stalled since notching a record closing high on Tuesday, and its weekly gains have been capped by a growing sense of uncertainty among market participants over expected interest rate cuts by the Federal Reserve.
It was records galore for Wall Street last week, when the S&P (SP500) and the blue-chip Dow Jones Industrial Average (DJI) crossed 5,300 points and 40,000 points, respectively, in a historic first for both indexes.
That momentum was largely sustained at the beginning of this week over Monday and Tuesday, though traders refrained from big moves ahead of chip giant Nvidia’s (NVDA) hotly anticipated quarterly results.
Even with extremely lofty expectations, Nvidia (NVDA) once again delivered and shocked Wall Street with another blowout performance. The Jensen Huang-led firm’s fiscal first quarter results showed revenue from data centers swelling by a staggering 427% Y/Y, underscoring the seemingly inexhaustible demand for the company’s chips that power artificial intelligence (AI) processes.
Nvidia (NVDA) ended up adding nearly $220B to its market capitalization on Thursday alone after its stock jumped more than 9%. The surge also helped the Nasdaq Composite (COMP:IND) end the week at a record closing high.
However, Nvidia’s (NVDA) showing was countered by Fed commentary and economic data that continued to put a dampener on interest rate cut expectations.
On Wednesday, the minutes of the Fed’s latest rate meeting showed that many participants were unsure about whether policy was tight enough and were willing to further hike rates if necessary. Then, on Thursday, a S&P Global report pointed to sticky inflation and strong U.S. business activity growth despite high interest rates – indicators that the Fed doesn’t want to see.
“The latest FOMC meeting minutes and a flock of Fed officials on the speaking circuit this week provided additional evidence that rate cuts this summer are not likely. On balance, the Fed communication channel conveyed a sense that monetary policy was transmitting through the economy at a slower pace than previous cycles and a desire for more patience in order to gain certainty that inflation is on its way to 2%,” Wells Fargo said.
The attention now shifts to next week’s personal income and outlays data due Friday. That report will contain a reading on the Fed’s favored inflation gauge – the core personal consumption expenditures price index.
Turning to the weekly performance of the S&P 500 (SP500) sectors, nine of the 11 ended in the red. Energy and Real Estate topped the losers, with both falling nearly 4% each. Technology and Communication Services were the two gainers. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from May 17 close to May 24 close:
#1: Information Technology +3.44%, and the Technology Select Sector SPDR Fund ETF (XLK) +1.59%.
#2: Communication Services +0.25%, and the Communication Services Select Sector SPDR Fund (XLC) +0.41%.
#3: Industrials -0.68%, and the Industrial Select Sector SPDR Fund ETF (XLI) -0.69%.
#4: Materials -0.86%, and the Materials Select Sector SPDR Fund ETF (XLB) -0.86%.
#5: Utilities -1.16%, and the Utilities Select Sector SPDR Fund ETF (XLU) -1.16%.
#6: Health Care -1.31%, and the Health Care Select Sector SPDR Fund ETF (XLV) -1.29%.
#7: Consumer Staples -1.32%, and the Consumer Staples Select Sector SPDR Fund ETF (XLP) -1.42%.
#8: Consumer Discretionary -1.85%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) -1.77%.
#9: Financials -1.97%, and the Financial Select Sector SPDR Fund ETF (XLF) -2.07%.
#10: Real Estate -3.70%, and the Real Estate Select Sector SPDR Fund ETF (XLRE) -3.64%.
#11: Energy -3.82%, and the Energy Select Sector SPDR Fund ETF (XLE) -3.78%.
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.
