Weekly Market Recap

February 06, 2023

The S&P 500 index rose 1.6% last week with the communication services and technology sectors leading a broad climb amid better-than-expected quarterly results from some companies and a slower pace of rate increases from the Federal Open Market Committee.

The market benchmark ended the week at 4,136.48, up from last Friday's closing level of 4,070.56. The index is now up 7.7% for the year to date but down 8.1% from a year ago.

Last week's advance came as the Federal Open Market Committee raised its federal funds rate by 25 basis points, marking the smallest increase since the policy-setting committee began raising rates last year. The last bump prior to this, which was in December, amounted to a 50-basis-point increase, which followed a 75-point increase in November. Investors were relieved by the slowdown in rate increases.

Still, better-than-expected January jobs data on Friday raised questions over whether the FOMC may have to get more aggressive with its tightening again to combat inflation.

The data showed the US economy added more jobs than expected last month as the pace of hiring accelerated. Nonfarm employment increased by 517,000 last month, much larger than the consensus estimate according to Econoday for an 185,000 rise. The unemployment rate slipped to 3.4% from 3.5% in December; Wall Street's consensus estimate was for a 3.6% rate.

By sector, communication services had the largest percentage increase last week, up 5.3%, followed by a 3.7% climb in technology and a 2.2% rise in consumer discretionary. Other gainers included industrials, real estate and financials.

Economic data due this week will be light, with nothing anticipated for Monday, the December international trade deficit on Tuesday, and the University of Michigan's consumer sentiment index and inflation expectations due on Friday.