S&P 500 ends earnings-heavy week more than 2% higher ahead of Fed meeting

The S&P 500 (SP500) on Friday advanced 2.47% for the week to close at 4,070.56 points, while its accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) added 2.48%.

The advance adds to the benchmark index’s overall positive start to the new year. The S&P 500 has now posted gains in three of 2023’s first four weeks.

Investors jumped back into growth stocks during the week, with consumer firms and technology companies jumping the most. Market participants squared up their positions and bought into equities ahead of the Federal Reserve’s first monetary policy committee meeting next week. The central bank is widely expected to downshift to a 25 basis point rate hike, and the general consensus is that the Fed’s aggressive interest rate hikes are now off the table.

The week also saw the fourth quarter earnings season kick into high gear. Results from many major companies have rolled in and have mostly been a mixed bag. The technology sector saw reports from stalwarts such as Microsoft (MSFT), IBM (IBM) and Intel (INTC), with all three disappointing investors. On the other hand, electric vehicle maker Tesla’s (TSLA) numbers and guidance were cheered.

Dow 30 components 3M (MMM), Verizon (VZ), Travelers (TRV), Johnson & Johnson (JNJ), Boeing (BA), Visa (V), American Express (AXP) and Chevron (CVX) were among the other companies to report their results.

Next week will see the earnings season become even busier, with household names such as Apple (AAPL), Amazon (AMZN), Meta (META) and Alphabet (GOOG) (GOOGL) on tap.

There was also a host of economic data during the week. Core personal consumption expenditures inflation moderated in December, which provided a boost to sentiment.

However, manufacturing data continued to point to signs of slowdown in the economy, with the January S&P Global Composite PMI showing a contraction in business activity for a seventh straight month and the January Richmond Fed manufacturing survey coming in worse-than-expected.

Meanwhile, the initial estimate for U.S. Q4 GDP growth came in stronger-than-anticipated, but showed a deceleration from Q3. Moreover, the number of Americans filing for weekly jobless claims hit a nine-month low, continuing to point to resilience in the labor market.

Investors also parsed through a higher State Street Investor Confidence Index for January, an easing in business uncertainty on revenue, a bigger-than-expected climb in December durable goods orders, and a rise in December new homes sales and pending home sales.

Of the 11 S&P 500 (SP500) sectors, nine ended this week in the green, led by heavyweight sectors Consumer Discretionary and Information Technology. Utilities and Health Care were the two losers. See below a breakdown of the weekly performance of the sectors as well as their accompanying SPDR Select Sector ETFs from Jan. 20 close to Jan. 27 close:

#1: Consumer Discretionary +6.38%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +6.41%.

#2: Information Technology +4.07%, and the Technology Select Sector SPDR ETF (XLK) +4.08%.

#3: Communication Services +3.28%, and the Communication Services Select Sector SPDR Fund (XLC) +4.12%.

#4: Real Estate +2.82%, and the Real Estate Select Sector SPDR ETF (XLRE) +2.88%.

#5: Financials +2.53%, and the Financial Select Sector SPDR ETF (XLF) +2.55%.

#6: Industrials +2.13%, and the Industrial Select Sector SPDR ETF (XLI) +2.17%.

#7: Energy +0.76%, and the Energy Select Sector SPDR ETF (XLE) +0.83%.

#8: Materials +0.71%, and the Materials Select Sector SPDR ETF (XLB) +0.75%.

#9: Consumer Staples +0.43%, and the Consumer Staples Select Sector SPDR ETF (XLP) +0.33%.

#10: Utilities -0.49%, and the Utilities Select Sector SPDR ETF (XLU) -0.49%.

#11: Health Care -0.89%, and the Health Care Select Sector SPDR ETF (XLV) -0.78%.

Below is a chart of the 11 sectors’ YTD performance and how they fared against the S&P 500. 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.