S&P 500 rises ~6% to post best week since late June on massive inflation relief rally

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The S&P 500 (SP500) on Friday ended 5.90% higher for the week at 3,992.93 points, its best weekly performance since late June. The gains were mainly due to a memorable rally staged by U.S. stocks on Thursday which was spurred by data that showed core and headline consumer inflation were softer than expected in October.

The CPI data sparked off hopes that the Federal Reserve would slow down its aggressive rate-hike path. According to the CME FedWatch tool, markets are now pricing in a 85.4% probability of a 50-basis-point hike at the central bank’s policy meeting next month, up from a 80.6% probability just earlier in the day.

Another major event during the week was the U.S. midterm elections, the results of which still remain uncertain as votes continue to be counted. The Republican Party looked set take control of the House, but the outcome of the Senate was yet to be decided. That uncertainty reflected in the stock market on Wednesday, with the S&P 500 (SP500) falling over 2% in that session.

The third quarter earnings season began to wind down this week. The biggest name that reported was entertainment giant Disney (DIS), which issued a disappointing quarterly report that sent its shares tumbling. Among other major companies, videogame stalwarts Take-Two Interactive (TTWO) and Activision Blizzard (ATVI) announced their numbers. Retail giants Walmart (WMT), Target (TGT) and Home Depot (HD) are among firms on tap to report next week, with investors closely watching out for their comments on consumer spending and forecasts for the all-important holiday quarter.

Crypto markets also garnered attention this week, as beleaguered exchange FTX’s troubled saga which ended in it filing for bankruptcy and its CEO Sam Bankman-Fried quitting sent cryptocurrencies into a tailspin. Bitcoin (BTC-USD) was on track to post weekly losses of more than 20%.

In terms of weekly economic data, other than the inflation report the calendar was light. Weekly jobless claims rose more than expected. The University of Michigan’s preliminary measure of November consumer sentiment came in lower than anticipated, while inflation expectations ticked up.

The SPDR S&P 500 Trust ETF (NYSEARCA:SPY) on Friday rose 5.89% for the week alongside the benchmark index. The ETF is -16.10% YTD.

All 11 S&P 500 (SP500) sectors ended the week in the green. Rate-sensitive sectors Information Technology and Communication Services were the top gainers, while defensive sectors Health Care and Utilities rose the least. See below a breakdown of the weekly performance of the sectors as well as the performance of their accompanying SPDR Select Sector ETFs from Nov. 4 close to Nov. 11 close:

#1: Information Technology +10.03%, and the Technology Select Sector SPDR ETF (XLK) +10.04%.

#2: Communication Services +9.23%, and the Communication Services Select Sector SPDR Fund (XLC) +9.41%.

#3: Materials +7.69%, and the Materials Select Sector SPDR ETF (XLB) +7.73%.

#4: Real Estate +7.07%, and the Real Estate Select Sector SPDR ETF (XLRE) +7.05%.

#5: Consumer Discretionary +5.93%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +5.52%.

#6: Financials +5.72%, and the Financial Select Sector SPDR ETF (XLF) +5.78%.

#7: Industrials +4.60%, and the Industrial Select Sector SPDR ETF (XLI) +4.69%.

#8: Consumer Staples +2.38%, and the Consumer Staples Select Sector SPDR ETF (XLP) +2.32%.

#9: Energy +2.00%, and the Energy Select Sector SPDR ETF (XLE) +1.87%.

#10: Utilities +1.39%, and the Utilities Select Sector SPDR ETF (XLU) +1.48%.

#11: Health Care +1.07%, and the Health Care Select Sector SPDR ETF (XLV) +1.04%.

Below is a chart of the 11 sectors’ YTD performance and how they fared against the S&P 500. 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.