S&P 500 closes above 5,100 points for the first time after nearly 1% weekly advance

The S&P 500 (SP500) on Friday advanced 0.95% for the week to end at 5,137.08 points, posting gains in three out of five sessions. Its accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) added 0.98% for the week.

The benchmark index’s second straight weekly advance saw it close above the historic 5,100 points mark for the first time ever. The milestone represents a benchmark for a Wall Street bull run that has now seen the S&P (SP500) post gains in sixteen of eighteen weeks. Moreover, fellow major average the Nasdaq Composite (COMP.IND) also rose for the week and notched both a new intraday all-time peak and a record closing high, more than two years after setting its previous marks.

Markets largely traded sideways over Monday to Wednesday as traders remained cautious ahead of the main event of the week – Thursday’s personal income and outlays report. The data painted a mixed picture on inflation. On the one hand, the core personal consumption expenditures (PCE) price index – the Federal Reserve’s preferred price gauge – arrived spot on with estimates. On the other hand, the indicator surged to its highest monthly reading in nearly a year, underscoring the sticky nature of current inflationary trends.

However, the core PCE’s in-line reading, coupled with weak manufacturing data through the week and a downtick in consumer sentiment, led to market participants slightly raising their expectations of the Fed cutting interest rates sooner. According to the CME FedWatch tool, the odds of a 25 basis point rate cut by the central bank at its May monetary policy committee meeting is now at about 27%, compared to 23% a week ago.

“The PCE price data were the focus for many heading into the past week. The January data were uneventful in the sense that they came out pretty close to consensus expectations, but they were noteworthy in that they showed a firm month for core (and ‘supercore’) inflation that raises questions about the underlying trajectory for consumer prices,” JPMorgan’s Michael Feroli said.

“While the 0.4% increase in the core PCE price index in January marked the largest monthly gain in a year, the related year-ago inflation rate continued to moderate (edging down to 2.8%oya) and we believe that inflation will keep softening over time through some uneven monthly reports,” Feroli added.

Thursday also marked Leap Day and the end of February. For the month, the S&P 500 (SP500) clocked an increase of 5.10%. The benchmark index is now on a four-month win streak.

Cryptocurrencies garnered a chunk of attention this week as well. Bitcoin (BTC-USD), the world’s largest crypto, is on track for gains of more than 21% for the week. The rise has seen it go past the $60K mark for the first time in two years, and its record high is now in sight.

The fourth quarter earnings season continued to wind down this week, though there were some major names that reported their results. Chief among them was Dow 30 component Salesforce (CRM), with the cloud-based software firm impressing investors with its earnings and guidance. Other companies that reported their results included cruise line operator Norwegian Cruise Line (NCLH), department store chain Macy’s (M), Chinese internet major Baidu (BIDU), e-commerce firm eBay (EBAY) and PC and electronics maker Dell Technologies (DELL).

Turning to the weekly performance of the S&P 500 (SP500) sectors, six ended in the green, led by a 2.5% gain in Technology. Health Care topped the losers. See below a breakdown of the performance of the sectors as well as their accompanying SPDR Select Sector ETFs from February 23 close to March 1 close:

#1: Information Technology +2.51%, and the Technology Select Sector SPDR ETF (XLK) +2.65%.

#2: Real Estate +2.11%, and the Real Estate Select Sector SPDR ETF (XLRE) +2.12%.

#3: Consumer Discretionary +2.04%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +2.06%.

#4: Energy +1.30%, and the Energy Select Sector SPDR ETF (XLE) +1.30%.

#5: Materials +1.16%, and the Materials Select Sector SPDR ETF (XLB) +1.27%.

#6: Industrials +1.00%, and the Industrial Select Sector SPDR ETF (XLI) +1.08%.

#7: Financials -0.07%, and the Financial Select Sector SPDR ETF (XLF) -0.02%.

#8: Communication Services -0.31%, and the Communication Services Select Sector SPDR Fund (XLC) +0.38%.

#9: Consumer Staples -0.54%, and the Consumer Staples Select Sector SPDR ETF (XLP) -0.45%.

#10: Utilities -0.63%, and the Utilities Select Sector SPDR ETF (XLU) -0.42%.

#11: Health Care -1.05%, and the Health Care Select Sector SPDR ETF (XLV) -1.05%.

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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Harry Byrne

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