2023-06-23 17:35:00 ET
The S&P 500 ( SP500 ) on Friday retreated 1.39% for the holiday-shortened week to close at 4,348.37 points, posting losses in three out of four sessions. Its accompanying SPDR S&P 500 Trust ETF ( NYSEARCA: SPY ) slipped 1.42% for the week.
The benchmark index snapped a five-week win streak as sentiment was hit by interest rate concerns. Last week was especially strong for the S&P 500 ( SP500 ) as it gained more than 2.5% after the Federal Reserve held interest rates steady for the first time following ten consecutive hikes.
Some of the pullback this week was also technical in nature, with the S&P 500 ( SP500 ) hitting resistance levels. The index last week climbed above the 4,400 points mark for the first time since April last year. After largely trading rangebound between 3,800 points to 4,200 points since January, the benchmark index's surge from 4,200 to 4,400 has been rapid.
This week, Fed chair Jerome Powell in his two-day testimony to the House and the Senate on Wednesday and Thursday, respectively, reiterated his expectations that more rate hikes will be needed this year to combat inflationary pressures. Moreover, central banks abroad also sent hawkish signals, with the UK, Norway and Turkey all hiking rates.
"Global markets have continued to struggle over the last 24 hours, with a fresh selloff for sovereign bonds and further equity declines across most regions. Several factors have been behind this, but the biggest was the dawning realization for investors that central banks are set to keep hiking rates into the second half of the year, particularly after a surprise 50bps move from the Bank of England," Deutsche Bank's Jim Reid said.
"(Powell) reiterated the message that officials felt it was appropriate to take rates higher by year-end, noting that a 'strong majority' of the FOMC saw two additional hikes. So Powell has been emphasizing the Fed’s hawkish June dot plot more than he did at the post-FOMC press conference last week," Reid added.
Economic data this week continued to show cooling in the economy, though also pointing to resilience in the labor market. Kansas Fed's composite index and manufacturing index readings for June worsened from the previous month, with the latter hitting levels that have been previously reached only in U.S. recessions. Meanwhile, the number of Americans filing for jobless claims remained at their highest since October 2021.
There were a few notable companies reporting their results this week. Parcel delivery giant FedEx ( FDX ) reported lower global volume and lesser-than-anticipated quarterly revenue. IT and consulting services firm Accenture ( ACN ) beat expectations and raised the lower end of its full year profit guidance. Used automobile retailer KarMax's ( KMX ) top and bottom line came in above estimates. Next week will see results from companies such as Nike ( NKE ), Micron Technology ( MU ) and General Mills ( GIS ).
Turning to the weekly performance of the 11 S&P 500 ( SP500 ) sectors, all lost ground except Health Care, which ended marginally higher. Real Estate and Energy led the losers. See below a breakdown of the weekly performance of the sectors as well as their accompanying SPDR Select Sector ETFs from June 16 close to June 23 close:
#1: Health Care +0.24% , and the Health Care Select Sector SPDR ETF ( XLV ) -0.16% .
#2: Consumer Discretionary -0.02% , and the Consumer Discretionary Select Sector SPDR ETF ( XLY ) -0.56% .
#3: Consumer Staples -0.45% , and the Consumer Staples Select Sector SPDR ETF ( XLP ) -1.19% .
#4: Communication Services -0.76% , and the Communication Services Select Sector SPDR Fund ( XLC ) -1.08% .
#5: Industrials -1.65% , and the Industrial Select Sector SPDR ETF ( XLI ) -2.06% .
#6: Materials -1.96% , and the Materials Select Sector SPDR ETF ( XLB ) -2.54% .
#7: Financials -2.02% , and the Financial Select Sector SPDR ETF ( XLF ) -2.50% .
#8: Information Technology -2.03% , and the Technology Select Sector SPDR ETF ( XLK ) -2.62% .
#9: Utilities -2.59% , and the Utilities Select Sector SPDR ETF ( XLU ) -3.37% .
#10: Energy -3.45% , and the Energy Select Sector SPDR ETF ( XLE ) -4.33% .
#11: Real Estate -4.03% , and the Real Estate Select Sector SPDR ETF ( XLRE ) -4.86% .
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 .
More on the markets
- S&P, Nasdaq snap five-week and eight-week win-streaks, respectively; Dow also slips
- Federal Reserve Watch: Look At All The Cash Assets Around
- Stock Market Volatility May Be Ready To Surge
- S&P 500 Top Likely At 4450, Get Ready For The Bear Market Phase 2
For further details see:
S&P 500 posts worst week since March as rate concerns stall Wall Street rally