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Market Recap
WEEK OF JUN. 5 THROUGH JUN. 9, 2023
The S&P 500 index notched a fourth consecutive weekly gain on an improved economic growth outlook as investors look forward to the consumer inflation report and the Federal Reserve's policy decision due next week. The benchmark index ended Friday's session at 4,298.86, up 0.4% from last Friday's closing level of 4,282.37. Seven sectors posted gains for the week, all outperforming the headline index, while technology, consumer staples, communication services and health care posted losses.
The World Bank and the Organization for Economic Co-operation and Development this week raised their global and US gross domestic product growth expectations for 2023. The OECD left its global GDP growth outlook for 2024 unchanged, while the World Bank downgraded its projections.
US economic data showed the international trade deficit widened in April to reach its largest level in six months, while weekly claims for jobless benefits jumped to the highest reading since October 2021, indicating a potentially softening labor market. The Institute for Supply Management's data showed a deceleration in services sector growth in May.
The Federal Open Market Committee is scheduled to announce its monetary policy decision Wednesday, with markets mostly projecting interest rates to hold steady, according to the CME FedWatch Tool. In a bid to combat inflation, the committee has lifted interest rates to their highest level since 2007, up from almost zero early last year. Bank of Canada announced a surprise interest-rate hike during the week.
Consumer discretionary led the pack, up 2.4% on the week amid a 14% boost from Tesla (TSLA). General Motors (GM) will integrate the North American Charging Standard connector design, developed by Tesla, into its new electric vehicles starting in 2025.
Financials rose almost 1% for the week, with help from a rally in regional bank stocks amid hopes of a Fed pause.
The energy sector gained 1.7%, following a rally in oil prices after Saudi Arabia's weekend announcement it will reduce its July exports by one-million barrels per day, while OPEC+ will extend about 1.1-million barrels per day of cuts through 2024. EQT (EQT) surged 5.5% for the week. The company on Thursday priced a cash tender offer for up to $300 million of its outstanding 6.125% senior notes due 2025.
Consumer staples fell 0.5% week-on-week, as a gain in spirits and wine company Brown-Forman (BF.A, BF.B) from higher fiscal Q4 results only managed to partially offset an 11% plunge in the Campbell Soup (CPB) stock after the food and snack company issued a downbeat earnings guidance.
Technology saw the steepest decline for the week, down 0.7%. Apple (AAPL) introduced its $3,499 Vision Pro mixed-reality headset at its Worldwide Developers Conference during the week, garnering mixed reviews from analysts.
Communication services dropped 0.4%, despite an 18% surge in the Warner Bros. Discovery (WBD) stock after the company announced the departure of CNN Chief Executive and Chairman Chris Licht. Licht reportedly had spurred internal and external criticism in recent weeks after CNN hosted a town hall with former President Donald Trump.
Health care ticked 0.1% lower despite a 2.9% rise in Biogen (BIIB). The US Food and Drug Administration's advisory panel said the drugmaker's Alzheimer's treatment Leqembi may be eligible for full approval despite concerns about brain hemorrhage from using blood thinners with the drug.
Industrials increased 1.4%, with United Rentals (URI) and Delta Air Lines (DAL) significantly outpacing sector's gain. Utilities jumped 1.9% for the week, while materialsand real estate added 0.6% and 0.7%, respectively.
Other key macro data due next week include the producer price report for May, regional manufacturing prints from the Philadelphia Fed and the New York Fed, retail sales report for May, and the University of Michigan's consumer sentiment survey.
