The S&P 500 index rose 0.5% last week, starting May on a positive note, as investors grew more hopeful the Federal Reserve’s policy-setting committee will start cutting rates after April’s US Jobs Data came in weaker than expected.
The market benchmark is now up 7.5% for the year-to-date.
Earlier in the week, the index ended April with a 4.2% loss, the first monthly drop since October 2023. The decline came amid increasing fears that it may be a while before the Federal Open Market Committee feels comfortable lowering rates. The FOMC on Wednesday held benchmark interest rates steady for the sixth straight time, citing a lack of further progress on inflation in recent months.
Still, investors were optimistic on Friday after government data showed the US economy added fewer jobs than expected last month while wage growth eased. Total nonfarm payrolls climbed by 175,000 in April versus the Bloomberg consensus estimate of a gain of 240,000. The unemployment rate came in at 3.9%, up from 3.8% the month prior, which was the market’s expectation for April. Average hourly earnings growth slowed to 0.2% from 0.3% in March; expectations had been for wage growth to stay at 0.3% in April.
Quarterly earnings reports continued to come in largely above expectations although revenue hasn’t been coming in above estimates as much as earnings. Among the 185 S&P 500 components that released quarterly reports last week, almost 77% had better-than-expected earnings and 58% had better-than-expected revenue, according to Bloomberg data.
By sector, utilities led last week’s climb with a 3.4% rise, followed by a 1.6% increase in consumer discretionary and advances of 1.5% each in real estate and technology.
However, four sectors fell, led by energy, which lost 3.4%, and financials, which shed 0.6%.
This week’s earnings calendar features Vertex Pharmaceuticals, Walt Disney, Duke Energy, Uber Technologies, and Airbnb. Economic data will include April consumer credit and a preliminary reading on May consumer sentiment.
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