S&P 500 notches back-to-back weekly gains (NYSEARCA:SPY)

The S&P 500 (SP500) on Friday climbed 0.55% for the week to end at 5,127.79 points, posting gains in three out of five sessions. Its accompanying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) added 0.60% for the week.

The benchmark index notched a second straight weekly advance, helped by a Federal Reserve that was much more dovish than expected at its latest monetary policy decision and a significantly cooler-than-anticipated nonfarm payrolls report.

Going into the Fed’s rate decision on Wednesday, the S&P 500 (SP500) on Tuesday closed out the month of April with a slump of more than 4%. That retreat was largely driven by market participants rapidly dialing back their interest rate cut odds following a spate of stronger-than-expected economic data that pointed to a slowdown in growth and sticky inflation.

Wall Street was bracing for the worst from the Fed, including potential remarks from chair Jerome Powell that would completely take rate cuts off the table for the year. However, the central bank and Powell ended up coming off much more dovish than expected. Firstly, the Fed announced an earlier and deeper-than-expected cut in the pace of quantitative tightening. Secondly, chair Powell at a press conference said that the Fed’s next move was unlikely to be a rate hike.

Markets received more good news in terms of monetary policy on Friday, after the latest nonfarm payrolls report showed only 175K U.S. jobs added in April, markedly lower than the estimate of 243K. The data pointed to some relief in what has been a highly resilient labor market – something that the Fed is keenly watching for – and also rekindled rate cut hopes.

“Fed officials will likely view today’s (jobs) report as a welcome sign that the labor market is continuing to come into better balance and that policy is restrictive enough to cool off labor demand (particularly with large immigration flows raising the break-even level of monthly employment growth to 200K or higher). We’re sticking with our call for a first ease in July. The market is not there but we believe that if the next two job reports show continued cooling in labor market activity, then the FOMC will be comfortable taking back some of its policy restraint,” JPMorgan’s Michael Feroli said.

Aside from Fed action, this week also saw one of the busiest stretches of the first quarter earnings season with financials from a slew of major companies. The spotlight was on Amazon.com (AMZN) and Apple (AAPL), and both tech giants delivered. The former continued to show big growth at its Amazon Web Services cloud cash cow, while the latter put in a better-than-feared quarterly performance and unveiled a record $110B buyback program.

Turning to the weekly performance of the S&P 500 (SP500) sectors, seven ended in the green. Utilities clocked an outsized +3% gain. Energy, Financials and Communication Services were the three losers, while Materials closed flat. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from April 26 close to May 3 close:

#1: Utilities +3.35%, and the Utilities Select Sector SPDR Fund ETF (XLU) +3.35%.

#2: Consumer Discretionary +1.60%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +1.14%.

#3: Real Estate +1.53%, and the Real Estate Select Sector SPDR Fund ETF (XLRE) +1.54%.

#4: Information Technology +1.51%, and the Technology Select Sector SPDR Fund ETF (XLK) +1.36%.

#5: Health Care +0.59%, and the Health Care Select Sector SPDR Fund ETF (XLV) +0.62%.

#6: Consumer Staples +0.39%, and the Consumer Staples Select Sector SPDR Fund ETF (XLP) +0.38%.

#7: Industrials +0.09%, and the Industrial Select Sector SPDR Fund ETF (XLI) +0.09%.

#8: Materials flat, and the Materials Select Sector SPDR Fund ETF (XLB) +0.01%.

#9: Communication Services -0.55%, and the Communication Services Select Sector SPDR Fund (XLC) +0.12%.

#10: Financials -0.63%, and the Financial Select Sector SPDR Fund ETF (XLF) -0.66%.

#11: Energy -3.36%, and the Energy Select Sector SPDR Fund ETF (XLE) -3.31%.

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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