The S&P 500 (SP500) on Friday retreated 1.15% for the holiday-shortened week to close at 4,399.03 points, posting losses in three out of four sessions. Its accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) slipped 1.07% for the week.
After ending H1 with a big 15.90% jump, the benchmark index fell this week as investors took a bit of a breather while digesting the minutes of the latest Federal Reserve meeting and a host of data on the labor market.
The Fed minutes showed that some policymakers favored raising interest rates by 25 basis points in June. The central bank had kept rates steady for the first time after ten consecutive hikes.
Along with the hawkish signal from the Fed minutes, a mixed bag of economic indicators surrounding the jobs market also weighed on sentiment. Chief among them was the ADP report on private hiring, with the headline number coming in significantly above expectations.
Conversely, Friday’s nonfarm payrolls report showed an addition of 209K jobs in June, lower than the expected 225K number and below the 306K recorded in May. Though the data did not come in as strong as the ADP report, it still showed that the labor market was highly resilient and that there was still some ways to go for the Fed in terms of its policy tightening.
Market participants also parsed the Job Openings and Labor Turnover Survey, or JOLTS report, which showed a fall in job openings in May from April, while the quits rate ticked up to 2.6%. Challenger’s gauge of job cuts also came in, dropping 49% in June to 40.7K. Finally, the number of Americans filing for initial jobless claims in the past week rose by 12K to 248K, compared to an expected figure of 245K.
According to the CME FedWatch tool, the markets are now pricing in a ~92% probability of a 25 basis point hike by the Fed’s monetary policy committee at its meeting later this month.
Another factor weighing on the benchmark S&P 500 (SP500) this week was a pullback in technology stocks after a massive rally sparked by enthusiasm around artificial intelligence. The biggest news in the tech sector was Meta Platforms’ (META) launch of Threads, a competitor to Twitter. The Facebook-parent’s CEO Mark Zuckerberg said that the platform had already surpassed 70M users. Twitter, led by Elon Musk, has threatened to sue Meta (META) over the launch.
Next week, the earnings season will start, with big banks including JPMorgan (JPM), Citigroup (C) and Morgan Stanley (MS) scheduled to report their financial figures. Traders will also be receiving quarterly results from number one U.S. carrier Delta Air Lines (DAL) and medical insurance giant UnitedHealth (UNH).
Turning to the weekly performance of the 11 S&P 500 (SP500) sectors, Real Estate was the only sector to end in the green. Health Care and Materials fell the most, while Technology retreated nearly 1.5%. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from June 30 close to July 7 close:
#1: Real Estate +0.53%, and the Real Estate Select Sector SPDR ETF (XLRE) +0.27%.
#2: Utilities -0.20%, and the Utilities Select Sector SPDR ETF (XLU) -0.08%.
#3: Communication Services -0.32%, and the Communication Services Select Sector SPDR Fund (XLC) -0.05%.
#4: Consumer Discretionary -0.33%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) -0.26%.
#5: Financials -0.46%, and the Financial Select Sector SPDR ETF (XLF) -0.36%.
#6: Energy -0.67%, and the Energy Select Sector SPDR ETF (XLE) -0.47%.
#7: Industrials -1.04%, and the Industrial Select Sector SPDR ETF (XLI) -1.04%.
#8: Consumer Staples -1.09%, and the Consumer Staples Select Sector SPDR ETF (XLP) -0.96%.
#9: Information Technology -1.46%, and the Technology Select Sector SPDR ETF (XLK) -1.52%.
#10: Materials -2.01%, and the Materials Select Sector SPDR ETF (XLB) -1.97%.
#11: Health Care -2.87%, and the Health Care Select Sector SPDR ETF (XLV) -2.81%.
Below is a chart of the 11 sectors’ YTD performance and how they fared against the S&P 500 (SP500). 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.