S&P 500 (SP500) on Friday down 1.11% for the week at 4,090.46 points, recording losses in four out of five sessions. Its companion SPDR S&P 500 Trust ETF (NYSEARCA: A SPY) slipped 1.05%.
That was the benchmark the index’s worst weekly performance of the new year so far, as sentiment was dampened by lingering worries about the Federal Reserve.
Last Friday’s explosive jobs report weighed on sentiment at the start of the week, as market participants worried that a jump in job creation would keep pressure on the Fed to keep raising rates.
Fed Chairman Jerome Powell calmed markets somewhat on Tuesday after making less dovish comments than expected at an event in Washington, DC. The central bank chief also didn’t seem too concerned about a hotter-than-expected jobs report. He repeated that the “process of disinflation” had begun, but that there was more work to be done and more interest rate hikes.
However, Powell’s comments were followed by warnings from a string of Fed speakers on Thursday that more rate hikes would be needed to fight inflation, fueling fears that policymakers may have to remain indecisive for longer than previously expected.
In that week, the earnings season also started to grow. Major companies reporting their results include entertainment giant Disney ( DIS ), ride-sharing company Uber ( UBER ), beverage maker Pepsi ( PEP ), payment processor PayPal ( PYPL ), and video game publishers Activision Blizzard ( ATVI ) and Take-Two ( TTWO).
“We’re more than halfway through the fourth quarter reporting season in the US, with 63% of companies reporting,” JPMorgan’s Bram Kaplan said in a note.
“Earnings are down on a year-over-year basis this quarter, for the first time since 2020. … Energy, Industrials and Discretionary are posting strong growth, while Materials, Financials, Technical and Communications Services are in double-digit declines due to EPS growth,” he said. Chaplain.
In terms of economic data, the calendar for the week was relatively light. Of note are the weekly jobless claims numbers, which showed that the number of Americans filing claims rose to 196,000, compared to an expected 192,000. The data indicated continued resilience in the labor market.
Investors also digested a smaller-than-expected increase in the deficit in trade in goods and services, an expected rise in wholesale inventories in December 2022 and a preliminary measure of consumer sentiment from the University of Michigan in February.
All 11 sectors of the S&P 500 index (SP500) – with the exception of Energy – ended the week in the red, and Communication Services and Consumer Discretion fell the most. Below is a breakdown of the weekly performance of the sectors as well as their companion SPDR Select Sector ETFs from February 3rd close to the February 10th close:
#1: Energy +5.03%and Energy Select Sector SPDR ETF (XLE) +4.94%.
#2: Healthcare -0.20%and Health Care Select Sector SPDR ETF (XLV) -0.15%.
#3: Utilities -0.38%and Utilities Select Sector SPDR ETF (XLU) -0.29%.
#4: Finances -0.38%and Financial Select Sector SPDR ETF (XLF) -0.27%.
#5: Staples for general use -0.54%and Consumer Staples Select Sector SPDR ETF (XLP) -0.59%.
#6: Industry -0.70%and Industrial Select Sector SPDR ETF (XLI) -0.69%.
#7: Information technology -1.10%and Technology Select Sector SPDR ETF (XLK) -0.98%.
#8: Materials -1.66%and Materials Select Sector SPDR ETF (XLB) -1.65%.
#9: Real estate -2.01%and Real Estate Select Sector SPDR ETF (XLRE) -2.05%.
#10: Consumer discretionary rights -2.22%and Consumer Discretionary Select Sector SPDR ETF (XLY) -2.11%.
#11: Communication services -6.59%and the SPDR fund for selected sectors of communication services (XLC) -5.57%.
Below is a chart of the year-to-date performance of 11 sectors and how they fared relative to the S&P 500. For investors looking ahead to what’s going on, check out the Seeking Alpha Catalyst Watch for a breakdown of the action events that stand out next week.
