S&P 500 ends week up more than 1% as favorable data, China stimulus ripple through markets
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The S&P 500 (SP500) on Friday added 1.59% for the week to end at 5,738.17 points, posting gains in three out of five sessions. Its accompanying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) climbed 1.38% for the week.
The benchmark this week nailed down its 41st and 42nd record closing highs of 2024 following last week’s large rate cut of 50 basis points by the Federal Open Market Committee as inflation has cooled. This week wrapped up with the Fed’s preferred inflation gauge – core PCE – showing further price cooling in August. U.S. gross domestic product also this week was confirmed to have grown at a strong 3% pace in Q2, aiding the large-cap index.
“Big picture, after sleeping on it for a bit, it feels like the biggest takeaway from September FOMC is this: while it’s not fully obvious whether 50 bps increments are the new baseline or not, it does seem clear that it’s a high bar to stop cutting, while it’s a low bar to deploy another clip of 50,” Tony Pasquariello, Goldman Sachs’ global head of hedge fund coverage, said in a note this week.
An overseas force also contributed to this week’s stock gains: China. Authorities in the world’s second-largest economy unveiled stimulus measures, including rate cuts on existing mortgages, to aid the struggling property market and bolster overall growth.
Hedge-fund boss David Tepper of Appaloosa Management responded enthusiastically, saying he was buying “everything” tied to China’s prospects. Big S&P 500 (SP500) winners this week were Las Vegas Sands (LVS) and Wynn Resorts (WYNN), each surging +22% as the companies operate in China’s casino enclave Macau.
Shares of U.S. companies with the highest percentage of sales to China posted strong returns this week, Wells Fargo noted. China-related ETFs, including the SPDR S&P China fund (GXC) and the iShares MSCI China ETF (MCHI), also flew higher this week.
The S&P 500 (SP500) on Friday had been on track to log a new closing high, but the Information Technology sector fell -1% in part as Nvidia (NVDA) dropped. But the Tech sector rose for the week, with chip stocks fired up as AI-tech demand fed into Micron Technology’s (MU) better-than-expected quarterly guidance. The widely watched Philadelphia Semiconductor Index (SOX) advanced more than +4% for the week.
Next week, September trade will finish and the September U.S. jobs report is due. The Fed pointed to slowing in the labor market as a factor in its decision to jumpstart rate cuts. Also, a major labor strike at East Coast ports could start October 1 unless the International Longshoremen’s Association approves a new contract.
Turning to the weekly performance of the S&P 500 (SP500) sectors, seven of the 11 advanced. Materials paced winners with a gain of more than 3%. Energy lost the most. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from September 20 close to September 27 close:
#1: Materials +3.38%, and the Materials Select Sector SPDR Fund ETF (XLB) +3.03%.
#2: Consumer Discretionary +1.75%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +2.11%.
#3: Industrials +1.55%, and the Industrial Select Sector SPDR Fund ETF (XLI) +1.24%.
#4: Information Technology +1.13%, and the Technology Select Sector SPDR Fund ETF (XLK) +1.15%.
#5: Utilities +1.03%, and the Utilities Select Sector SPDR Fund ETF (XLU) +0.42%.
#6: Communication Services +1.02%, and the Communication Services Select Sector SPDR Fund (XLC) +1.25%.
#7: Consumer Staples +0.09%, and the Consumer Staples Select Sector SPDR Fund ETF (XLP) -0.04%.
#8: Real Estate -0.21%, and the Real Estate Select Sector SPDR Fund ETF (XLRE) -0.87%.
#9: Financials –0.53%, and the Financial Select Sector SPDR Fund ETF (XLF) -1.12%.
#10: Energy -0.82%, and the Energy Select Sector SPDR Fund ETF (XLE) -1.77%.
#11: Health Care -1.13%, and the Health Care Select Sector SPDR Fund ETF (XLV) -1.46%.
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.