The S&P 500 (SP500) on Friday fell 0.51% for the week to end at 5,277.51 points, posting losses in two out of four sessions in the week shortened by the Memorial Day holiday. Its accompanying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) shed 0.39%.
The benchmark index in the holiday-shortened week logged its first weekly decline after posting a five-week win streak.
The S&P (SP500) has come off the record closing high of 5,321.49 it reached last week. Investors have been assessing shrinking prospects for a hefty round of Federal Reserve rate cuts in 2024 as well as some bumps in an overall solid Q1 earnings season. This week, Salesforce (CRM) shares sank after the enterprise software giant’s Q1 report and guidance missed Wall Street’s marks and Dell (Dell) dropped after issuing soft margin guidance.
Markets on Friday received the April PCE inflation report, with the Fed’s official target – the 12-month Core PCE – holding steady at 2.8% from March. The inflation data met consensus estimates, but spending within the report was a little less than anticipated, Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said in a note.
“We are in a be-careful-what-you-wish-for moment because if slowing consumer spending leads to lower inflation and the Fed is able to cut slowly as a result, then that will be good for markets,” Zaccarelli said. But “if consumer spending – and the economy – slows too quickly then corporate profits and stock prices will go down much more quickly than the Fed will be able to cut rates, so we would be careful at this point,” he said.
A Friday afternoon rally in stocks managed to carry the S&P 500 (SP500) and the blue-chip Dow index (DJI) into positive finishes for the day. The tech-focused Nasdaq Composite (COMP:IND) slipped but closed off its lowest level.
While the key indexes fell this week, they popped higher in May as they posted record highs. The S&P 500 (SP500) rose 4.80%, its strongest month since February. The Nasdaq Composite (COMP:IND) soared 6.88%, the sharpest rise since November 2023. The Dow industrials (DJI) rose 2.30%, its best advance since December 2023. The blue-chips average broke through the 40,000 mark this month.
Shares of AI chipmaker Nvidia (NVDA) surged 26.89% in May, a marquee winner for the month. Investors cheered the company’s Q1 results, forward guidance and plan for a 10-for-1 stock split effective in June.
“NVDA has posted a perhaps unprecedented streak of beating market consensus for revenues and profits, raising its guidance, then beating the raised guidance and raising it once more,” Interactive Brokers Chief Strategist Steve Sosnick said this week.
June trade will get underway next week. Investors will watch for the May U.S. jobs report and an expected rate cut by the European Central Bank that would start its rate-easing cycle. Nvidia’s (NVDA) 10-for-1 stock split will become effective late Friday, and shares will start trading on a split-adjusted basis on Monday, June 10.
Turning to the weekly performance of the S&P 500 (SP500) sectors, six of 11 rose. Energy and Real Estate topped the winners, with each rising roughly 2%. Health Care, Industrials and Technology fell. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from May 24 close to May 31 close:
#1: Energy +2.01%, and Energy Select Sector SPDR Fund ETF (XLE) +2.00%. #2: Real Estate +1.80%, and the Real Estate Select Sector SPDR Fund ETF (XLRE) +1.87%. #3: Utilities +1.62%, and the Utilities Select Sector SPDR Fund ETF (XLU) +1.71%. #4: Consumer Staples +0.09%, and the Consumer Staples Select Sector SPDR Fund ETF (XLP) +0.31%. #5: Materials +0.08%, and the Materials Select Sector SPDR Fund ETF (XLB) +0.19%. #6: Financials +0.05%, and the Financial Select Sector SPDR Fund ETF (XLF) +0.07%. #7: Consumer Discretionary -0.31%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) -0.42%. #8: Health Care -0.58%, and the Health Care Select Sector SPDR Fund ETF (XLV) -0.49%. #9: Communication Services -0.60%, while the Communication Services Select Sector SPDR Fund (XLC) +0.37%. #10: Industrials -0.84%, and the Industrial Select Sector SPDR Fund ETF (XLI) -0.76%. #11: Information Technology -1.46%, and the Technology Select Sector SPDR Fund ETF (XLK) -2.33%.
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