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Market Recap
WEEK OF JULY. 3 THROUGH JULY. 7, 2023
The S&P 500 index slipped 1.2% in the first week of 2023's second half as minutes from the latest Federal Open Market Committee meeting and mixed June Jobs data kept a July rate increase on the table. The market benchmark ended Friday's session at 4,398.95, down from last Friday's closing level of 4,450.38. The move came in a shortened week as the US stock market closed three hours early on Monday and remained closed Tuesday for Independence Day.
Last Friday, June 30th, the S&P 500 locked in a first-half gain of 16%, including a 6.5% jump in June. Investors were relieved in the first six months of the year to see US economic growth holding up as well as it has despite inflation and higher interest rates, while they also have been encouraged to see the pace of rate increases slowing. The FOMC last month voted to keep its key policy rate steady for the first time in 11 meetings, a move many investors cheered.
Anxiety returned this week as minutes from the FOMC's June meeting said while the majority of the policy-setting committee members favored holding the key rate steady last month, "some participants indicated that they favored raising the target range for the federal funds rate 25 basis points at this meeting or that they could have supported such a proposal."
The minutes also said almost all participants "judged that additional increases in the target federal funds rate during 2023 would be appropriate."
On Friday, the Labor Department reported nonfarm payrolls rose by 209,000 in June. While this is less than the 230,000 jobs increase expected in a survey compiled by Bloomberg, the unemployment rate met expectations with a drop to 3.6% in June from 3.7% in May. The data were seen as keeping Fed officials likely to lift interest rates at their meeting later this month as they try to tame inflation.
All but one sector fell this week. Health care had the largest percentage drop, falling 2.9%, followed by a 2.0% decline in materials and a 1.5% slip in technology. Consumer staplesand industrials were also down by more than 1% each. Real estate, which eked out a 0.2% increase, was the lone sector in positive territory for the week.
The health care sector's decliners included shares of UnitedHealth Group (UNH), which fell 4.0% this week as JPMorgan Chase lowered its price target on the stock to $527 from $562. The firm kept its investment rating on the shares at overweight.
The decliners in the materials sector were led by Martin Marietta Materials (MLM), which shed 4.7% amid an investment rating downgrade to neutral from overweight by JPMorgan Chase even as the firm raised its price target on the stock to $470 per share from $450.
Steel Dynamics (STLD) was another decliner in the materials sector as its stock also received an investment rating downgrade. BNP Paribas lowered its rating on Steel Dynamics' shares to neutral from outperform while cutting its price target on the stock to $102 from $129. The shares fell 3.5%.
On the upside, the real estate sector's gainers included Simon Property Group (SPG), which received an investment rating upgrade to outperform from peer perform from Wolfe Research. Shares climbed 2.7% this week.
Economic data expected next week include the June consumer price index on Wednesday, the June producer price index on Thursday and a preliminary reading on July consumer sentiment on Friday.
Second-quarter earnings reports will begin rolling in from companies including Pepsico (PEP), UnitedHealth Group (UNH), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C).
