The S&P 500 experienced a notable increase of 4.02% over the week, closing at 5,626.02 points and recording gains in all five trading sessions. The SPDR S&P 500 ETF Trust also saw a weekly rise of 4.01%.
This week witnessed a resurgence of bullish activity on Wall Street, allowing the benchmark index to rebound from its worst week of the year to post its best performance since the end of October 2023. According to Bespoke Investment Group, the last time the S&P 500 fell by at least 4% in one week and then rallied more than 4% the next week was in June 2022.
The prior week’s selloff was attributed to concerns over economic growth following weak data, particularly in the labor market, coupled with September’s historically weaker performance. These concerns led investors to pull out of growth sectors, such as Technology, in favor of safer assets like bonds.
The market narrative shifted this week following the release of inflation data that reinforced expectations of a Federal Reserve interest rate cut. The main question now is the extent of the rate cut. The Consumer Price Index (CPI) report for August indicated a cooling in the headline number on a year-over-year basis, with the Producer Price Index (PPI) similarly decelerating. The core CPI and PPI figures were slightly higher than anticipated.
Wells Fargo commented that the recent employment report provided mixed signals for the Federal Reserve’s decision, with an acceleration in hiring in August but downward revisions to previous data. The inflation data provided this week has lent more clarity to the situation. The core CPI printed at 0.3% month-over-month in August, slightly above consensus forecasts and marking the fastest price increase in four months. Wells Fargo noted that while this inflationary spike is likely a volatile pop rather than a trend shift, it may prompt the Federal Open Market Committee (FOMC) to proceed with caution.
In other significant events, the second U.S. presidential debate took place this week between Democratic nominee Kamala Harris and Republican nominee Donald Trump. The candidates debated various topics, with the consensus being that Harris won the debate.
Regarding the performance of the S&P 500 sectors, all except Energy ended in positive territory. The Technology sector led the gains, followed by Consumer Discretionary and Communication Services. Detailed sector performances from September 6 to September 13 are as follows:
1. Information Technology: +7.33%, with the Technology Select Sector SPDR Fund ETF (XLK) up 8.10%.
2. Consumer Discretionary: +6.14%, with the Consumer Discretionary Select Sector SPDR ETF (XLY) up 5.53%.
3. Communication Services: +4.27%, with the Communication Services Select Sector SPDR Fund (XLC) up 3.70%.
4. Industrials: +3.70%, with the Industrial Select Sector SPDR Fund ETF (XLI) up 3.72%.
5. Real Estate: +3.41%, with the Real Estate Select Sector SPDR Fund ETF (XLRE) up 3.62%.
6. Utilities: +3.38%, with the Utilities Select Sector SPDR Fund ETF (XLU) up 3.46%.
7. Materials: +3.16%, with the Materials Select Sector SPDR Fund ETF (XLB) up 3.11%.
8. Health Care: +1.44%, with the Health Care Select Sector SPDR Fund ETF (XLV) up 1.44%.
9. Consumer Staples: +1.11%, with the Consumer Staples Select Sector SPDR Fund ETF (XLP) up 1.13%.
10. Financials: +0.48%, with the Financial Select Sector SPDR Fund ETF (XLF) up 0.50%.
11. Energy: -0.74%, with the Energy Select Sector SPDR Fund ETF (XLE) down 0.49%.
For those tracking the benchmark S&P 500, notable exchange-traded funds include VOO, IVV, RSP, SSO, UPRO, SH, SDS, and SPXU. Investors looking for future market insights can refer to the Seeking Alpha Catalyst Watch for a breakdown of actionable events.
