The S&P 500 index fell 2.6% last week, its first weekly loss since March, as stronger-than-anticipated May payrolls boosted bets that the Federal Reserve will raise rates this year. The index is now up 7.9% this year.
On Tuesday, the benchmark index set a new intraday and closing highs over 7,600. The gains were erased later in the week after the Labor Department released its May employment data.
The jobs report showed nonfarm payrolls rose by 172,000, well above the 88,000 increase expected. April and March payrolls also received upward revisions for a net upward revision of 93,000 jobs. However, the May unemployment rate remained at 4.3%, as expected.
The probability of a 25-basis-point increase in interest rates in December rose to 43%, according to the CME FedWatch tool. The comparisons for September were 33% versus 20%. For October, the data showed an increase to 39% from 25%.
The consumer discretionary sector had the largest percentage drop of the week, falling 6.2%, followed by a 5.4% loss in technology and a 3.9% slide in communication services. Materials shed 1.2% while utilities edged lower.
Ford Motor (F) was hit hardest in consumer discretionary, losing 15%. The automaker reported its total US vehicle sales fell 13.6% year over year in May to 190,828 vehicles.
Also weighing on consumer discretionary, Lululemon (LULU) shares fell 13%. The athletic apparel retailer forecast fiscal Q2 earnings per share and revenue below analysts’ expectations despite its fiscal Q1 results slightly topped Street views.
On the upside, the energy sector rose 2.5%, followed by a 2.3% gain in health care, a 1.5% rise in real estate and a 1.3% increase in financials. Consumer staples and industrials also edged higher.
Marathon Petroleum (MPC) had the largest weekly percentage increase in the energy sector, climbing 5.3%. The company reported it swung to a larger-than-expected Q1 adjusted net profit from a year-earlier loss while revenue also topped expectations.
This week, earnings are expected from companies including Oracle (ORCL) and Adobe (ADBE). Economic data will include the May consumer price index and the May producer price index.
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