S&P 500 adds nearly 2% for the week (NYSEARCA:SPY)

The S&P 500 (SP500) on Friday advanced 1.66% for the holiday-shortened week to end at 5,088.80 points, posting gains in three out of four sessions. Its accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) added 1.67% for the week.

To say that Nvidia’s (NVDA) latest quarterly results was the main event of the week would be an understatement, given the scale of the astonishing rally that the event sparked – and not just in the U.S. but also in global markets. It was responsible for a majority of the benchmark S&P 500’s (SP500) gain this week and helped the gauge bounce back from only its second negative week of the year last Friday.

Nvidia’s (NVDA) blockbuster quarterly earnings and guidance stunned even the most bearish investors and analysts. The Jensen Huang-led chip giant forecasted huge demand, as companies across the world cannot seem to get enough of its graphics processing units that can power artificial intelligence (AI) processes such as large language models.

“We’ve been discussing in recent days how Nvidia (NVDA) earnings was the main macro event of the week and how options were pricing in a 10.5% move in either direction in the 24-hours post earnings. This made me a bit nervous we were overselling the event but the reality is we undersold it as post earnings the company surged +16.40% yesterday, a phenomenal performance for one of the biggest companies in the world. There is no doubt it transformed the mood of the whole global risk market as well,” Deutsche Bank’s Jim Reid said.

To get an idea of how big Nvidia’s (NVDA) Thursday advance was, the company added $277B in stock market value, eclipsing the earlier single day record notched by Facebook-owner Meta Platforms (META) at the start of February. It scaled another milestone earlier today when it became the first chipmaker to briefly cross $2T in market capitalization.

However, the outsized role played by just one company’s results in moving markets also led to the resurfacing of concerns around weightage. Nvidia (NVDA), along with its larger “Magnificent 7” club members, form over a quarter of the S&P 500’s (SP500) market value. Deutsche Bank last week outlined how those megacap stocks had become so big that they were effectively countries and not just companies in scale.

Despite Nvidia (NVDA) grabbing almost all of the spotlight this week, there were also some other important events.

The Federal Reserve’s minutes of its January monetary policy committee meeting was published on Wednesday. Recall it was at that meeting that the central bank pushed back against Wall Street’s aggressive interest rate cut expectations. The minutes backed up that message, showing that most Fed officials were in no rush to cut rates. Combined with last week’s hotter-than-anticipated inflation reports, the minutes led to market participants and analysts further dialing back their rate cut expectations.

Other major names to report quarterly results this week were Dow 30 components Walmart (WMT) and Home Depot (HD). The retailers delivered contrasting performances for the all-important holiday quarter, with the former topping comparable sales expectations but the latter seeing a fall in that key metric.

Speaking of Dow 30 components, the S&P Dow Jones Indices on Tuesday said tech and retail giant Amazon (AMZN) would replace pharmacy chain Walgreens Boots Alliance (WBA) in the venerable blue-chip index.

Finally, in a notable move in the mergers and acquisitions space, Capital One Financial (COF) on Monday said it would acquire Discover Financial Services (DFS) in an all-stock deal valued at $35.3B. The proposed transaction – which is sure to get intense regulatory scrutiny – will create the sixth-largest U.S. bank by assets.

Turning to the weekly performance of the S&P 500 (SP500) sectors, all eleven ended in the green, led by about 2% gains in Consumer Staples and Technology. Energy and Real Estate rose the least. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from February 16 close to February 23 close:

#1: Consumer Staples +2.11%, and the Consumer Staples Select Sector SPDR ETF (XLP) +2.05%.

#2: Information Technology +1.97%, and the Technology Select Sector SPDR ETF (XLK) +1.34%.

#3: Materials +1.90%, and the Materials Select Sector SPDR ETF (XLB) +1.95%.

#4: Industrials +1.78%, and the Industrial Select Sector SPDR ETF (XLI) +1.86%.

#5: Financials +1.60%, and the Financial Select Sector SPDR ETF (XLF) +1.69%.

#6: Consumer Discretionary +1.54%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +1.27%.

#7: Health Care +1.51%, and the Health Care Select Sector SPDR ETF (XLV) +1.54%.

#8: Communication Services +1.48%, and the Communication Services Select Sector SPDR Fund (XLC) +0.98%.

#9: Utilities +1.15%, and the Utilities Select Sector SPDR ETF (XLU) +1.19%.

#10: Real Estate +0.88%, and the Real Estate Select Sector SPDR ETF (XLRE) +0.96%.

#11: Energy +0.42%, and the Energy Select Sector SPDR ETF (XLE) +0.49%.

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.

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