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The S&P 500 (SP500) on Friday added 0.87% for the week to settle at 4,169.48 points, posting gains in three out of five sessions. Its accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) rose 0.86% for the week.
Sentiment was helped by strong earnings from major technology companies. However, gains were somewhat capped by jitters surrounding the regional banking space and economic data that stoked recession worries.
Big Tech took a chunk of the spotlight this week. FAANG members Alphabet (GOOG) (GOOGL) and Meta Platforms (META) impressed with their results, especially the latter which saw its stock pop nearly 14%. The Google-owner beat on both top and bottom line and boosted its share buyback, while the Facebook-parent blew past advertising revenue expectations and touted its work on artificial intelligence.
Meanwhile, Microsoft (MSFT) and Intel’s (INTC) reports were also cheered. The former saw its stock jump more than 7% after analysts heaped praise on its Azure cloud unit’s performance, while the latter provided outlook that signaled the PC downturn could be nearing an end.
The one negative spot was Amazon (AMZN), shares of which erased a post-earnings gain following a warning on cloud growth.
Outside of Big Tech, the week also saw reports from well-known names such as the world’s largest parcel delivery firm UPS (UPS), industrial conglomerates 3M (MMM) and GE (GE), telecom giant Verizon (VZ), plane maker Boeing (BA) and automaker General Motors (GM). Next week the earnings season will see announcements from Apple (AAPL), Advanced Micro Devices (AMD), Qualcomm (QCOM), Ford (F) and Starbucks (SBUX), among others.
A steadily worsening situation at First Republic Bank (FRC) also took a chunk of the spotlight this week, reigniting concerns over the stability of the financial system. The lender on Monday disclosed over $70B of deposit outflows in its first quarter, sending its stock plummeting on Tuesday.
The saga further deepened after a report said the White House, the Federal Reserve and the Treasury were considering plans to save the bank. This was followed by another report which said FRC was weighing selling up to $100B of securities and mortgages. Finally, on Friday, FRC was said to be heading for an imminent regulatory takeover. The stock has shed a whopping 75.4% for the week.
The banking worries, along with data during the week that continued to show major signs of cooling in the U.S. economy, have led to market participants bolstering their expectations that the Fed might be close to ending its rate-hiking campaign.
Chief among the economic data was the initial estimate for first quarter U.S. GDP which showed a gain of 1.1%, significantly lower than the 2.6% growth seen in the fourth quarter of 2022. However, on Friday, the core personal consumption expenditure index – a key inflation gauge monitored by the Fed – came in unchanged for March from February, in a sign that inflation was moderating.
All eyes will be on the Fed next week, with its monetary policy committee meeting scheduled to end on Wednesday. According to the CME FedWatch tool, markets are now pricing in a ~80% probability of a 25 basis point hike.
Turning to the weekly performance of the S&P 500 (SP500) sectors, six ended in the green, unsurprisingly led by Communication Services and Technology. Utilities and Industrials topped the weekly losers. See below a breakdown of the weekly performance of the sectors as well as their accompanying SPDR Select Sector ETFs from April 21 close to April 28 close:
#1: Communication Services +3.76%, and the Communication Services Select Sector SPDR Fund (XLC) +3.83%.
#2: Information Technology +2.43%, and the Technology Select Sector SPDR ETF (XLK) +2.08%.
#3: Real Estate +1.50%, and the Real Estate Select Sector SPDR ETF (XLRE) +1.53%.
#4: Consumer Staples +1.07%, and the Consumer Staples Select Sector SPDR ETF (XLP) +1.14%.
#5: Energy +0.29%, and the Energy Select Sector SPDR ETF (XLE) +0.18%.
#6: Consumer Discretionary +0.17%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +0.33%.
#7: Financials -0.17%, and the Financial Select Sector SPDR ETF (XLF) -0.15%.
#8: Materials -0.19%, and the Materials Select Sector SPDR ETF (XLB) -0.19%.
#9: Health Care -0.59%, and the Health Care Select Sector SPDR ETF (XLV) -0.57%.
#10: Industrials -0.63%, and the Industrial Select Sector SPDR ETF (XLI) -0.61%.
#11: Utilities -0.99%, and the Utilities Select Sector SPDR ETF (XLU) -0.92%.
Below is a chart of the 11 sectors’ YTD performance and how they fared against the S&P 500. 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.
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