The S&P 500 index rose 6.4% last week as stocks began bouncing off the previous week’s lows when the market benchmark entered bear market territory amid inflation concerns.
This marks the index’s first weekly advance since the week that ended May 27. Even with last week’s gain, the S&P 500 is down 5.3% for the month of June. With just four sessions remaining in the month as well as the first half of 2022, the index is down 18% for the year to date.
Last week, the index entered bear market territory as the Federal Reserve’s Federal Open Market Committee made a larger-than-expected increase in its benchmark interest rate following higher-than-expected inflation figures reported earlier this month. Investors have grown increasingly worried about whether the central bank will be able to achieve a “soft landing,” in which rate increases curbed inflation without sending the economy into a recession.
Last week, in testimony to the House Financial Services Committee, Fed Chairman Jerome Powell said a recession is possible and a soft landing would be “very challenging.” He also said the central bank would be reluctant to shift to cutting rates without clear evidence that inflation “really is coming down.”
Nevertheless, most US sectors rose last week, led by the consumer discretionary sector, which climbed 8.2%, and health care, which added 8.1%. Real estate was also strong, up 7.7%, followed by a 7.3% gain in technology, a 7.2% rise in utilities and a 7% climb in communication services, among other gainers. Energy, which slipped 1.6%, was the only sector in the red.
This week, as June and the first half of 2022 conclude, investors will be looking at data showing May pending home sales and durable goods orders on Monday, the June consumer confidence index on Tuesday, revised Q1 gross domestic product on Wednesday, May personal consumption expenditure inflation and consumer spending data due Thursday, and June manufacturing data due Friday.
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