XLC - S&P 500 caps week with all-time closing high just over two years after previous record

2024-01-19 18:00:00 ET

The S&P 500 ( SP500 ) on Friday advanced 1.17% for the holiday-shortened week to end at a new record closing high of 4,839.81 points, posting gains in two out of four sessions. Its accompanying SPDR S&P 500 Trust ETF ( NYSEARCA: SPY ) added 1.21% for the week.

After starting off the new year on a negative note, Wall Street has notched back-to-back weekly gains of more than 1%, largely helped by a climb in technology stocks which has helped counter a pushback against interest rate cut expectations.

The benchmark S&P 500 ( SP500 ) spent most of December within striking distance of both its record closing high and its all-time intraday peak. On Friday, the index finally brought it home, surging as much as 1.28% to hit a session high at 4,842.07 points. The record came just over two years after the previous mark which was set on January 4, 2022.

The story this week - which saw a holiday on Monday on account of Martin Luther King Jr. day - was dominated by two major headlines: technology stocks continuing to build on their staggering ~56% gain in 2023; and a bond sell-off sparked by a pushback by central bank officials in Europe and at home against markets' aggressive rate cut expectations for 2024.

"New All-Time High for the U.S. Stock Market. Since the last all-time high on 1/4/22, the average Russell 1,000 stock is down 5.95%, while the median stock in the index is down 9.95%. Say thank you to the mega-caps," Bespoke Investment Group noted on X (formerly Twitter).

The technology sector was the best performing for the week, and has now risen about 5% for the new year. On Tuesday, the space saw some significant mergers and acquisitions activity after Synopsys ( SNPS ), a maker of software used in chip design, said it would buy engineering software firm Ansys ( ANSS ) in a cash-and-stock deal valued at about $35B.

On Thursday, chip stocks took center stage. Taiwan Semiconductor Manufacturing ( TSM ), the world's largest contract chipmaker and a major supplier to Apple ( AAPL ) and Nvidia ( NVDA ), projected more than 20% annual revenue growth, which triggered a burst of buying in semiconductor names. Advanced Micro Devices ( AMD ) notably hit a record high.

Turning to monetary policy, rate cut expectations took a hit this week after several remarks from officials. European Central Bank speakers at the World Economic Forum at the start of the week painted a cloudy outlook on rate cuts. Then on Tuesday, Federal Reserve Governor Christopher Waller said that he saw "no reason" for the Fed to move quickly on rate cuts.

The comments led to a surge in U.S. Treasury yields as traders sold-off bonds. The longer-end 10-year yield ( US10Y ) rose 19 basis points this week. Meanwhile, according to the CME FedWatch tool, the odds of a 25 basis point rate cut by the Fed's monetary policy committee in March has now dropped to ~48% from ~77% a week ago.

The fourth quarter 2023 earnings season also picked up some steam this week. Goldman Sachs ( GS ) and Morgan Stanley ( MS ) rounded out the major banks. Brokerage giant Charles Schwab ( SCHW ) saw a decline in its top and bottom line. Birkenstock's ( BIRK ) first quarterly report since going public disappointed investors. Dow 30 component Travelers ( TRV ) delivered blowout earnings. Managed care players saw weakness after Humana ( HUM ) revised its profit guidance.

Looking at the weekly performance of the S&P 500 ( SP500 ) sectors, six ended in the red, while Information Technology topped the gainers with a +4% jump, underscoring how technology stocks have largely buoyed the market. Utilities and Energy topped the losers. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from January 12 close to January 19 close:

#1: Information Technology +4.31% , and the Technology Select Sector SPDR ETF ( XLK ) +4.13% .

#2: Communication Services +1.95% , and the Communication Services Select Sector SPDR Fund ( XLC ) +1.38% .

#3: Financials +0.94% , and the Financial Select Sector SPDR ETF ( XLF ) +0.88% .

#4: Consumer Discretionary +0.52% , and the Consumer Discretionary Select Sector SPDR ETF ( XLY ) +0.53% .

#5: Industrials +0.29% , and the Industrial Select Sector SPDR ETF ( XLI ) +0.30% .

#6: Health Care -0.72% , and the Health Care Select Sector SPDR ETF ( XLV ) -0.75% .

#7: Consumer Staples -1.04% , and the Consumer Staples Select Sector SPDR ETF ( XLP ) -1.03% .

#8: Materials -1.49% , and the Materials Select Sector SPDR ETF ( XLB ) -1.46% .

#9: Real Estate -2.22% , and the Real Estate Select Sector SPDR ETF ( XLRE ) -2.12% .

#10: Energy -3.08% , and the Energy Select Sector SPDR ETF ( XLE ) -3.04% .

#11: Utilities -3.70% , and the Utilities Select Sector SPDR ETF ( XLU ) -3.70% .

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 .

More on the markets

• S&P 500 closes at record high, Nasdaq and Dow also surge as Wall Street finds footing

• See how Treasury yields have done across the curve at the Seeking Alpha bond page

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