S&P 500 Ends Crazy Week Down Nearly 1% as Tech Sector Continues to Bleed (NYSEARCA:SPY)

S&P 500 (SP500) on Friday 0.84% ​​withdrawn for the week ending at 5,459.10 points, having lost three of the five sessions. The accompanying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) fell by 0.83% for this week.

Wall Street stock index records two-week losing streak for the first time since mid-April and now has fell by 3.71% from its all-time daily high of 5,669.67 points. The pullback was mainly due to heavy losses in technology stocks, with the sector currently down 7.45% within two weeks.

It was a wild week for stocks, to say the least. Market participants digested another twist in the US election race early on, followed by a dramatic sell-off in the middle and a rebound at the end.

Meanwhile, rotational trade continued, as evidenced by 0.82% AND 0.80% weekly gains in the equal-weighted S&P 500 index and its companion Invesco ETF (RSP). The equal-weighted index includes the same components as the capitalization-weighted S&P 500, but each company in the equal-weighted metric is assigned a fixed weight, meaning companies like Nvidia (NVDA) are given the same weight as Dollar Tree (DLTR).

In addition, the small-cap barometer, the Russell 2000 (RTY), advanced 3.53%.

Stock market investors reacted generally positively on Monday to U.S. President Joe Biden’s confirmation that he is withdrawing from the Democratic presidential nomination and instead endorsing Vice President Kamala Harris.

“In essence, the perception is that Biden’s withdrawal makes it more likely that Democrats will retain control of the White House, and Republicans are less likely to get the full sweep that would also allow them to win both houses of Congress, making Trump’s policies marginally less likely to be implemented,” said Jim Reid of Deutsche Bank.

Then on Wednesday the S&P 500 (SP500) fell by 2.31% while the technology-based Nasdaq Composite (COMP:IND) fell by 3.64%. The former ended its longest streak without a 2% decline since the beginning of the global financial crisis. The former recorded its worst day since October 7, 2022.

The selloff was primarily driven by disappointing earnings reports from “Magnificent 7” members Alphabet (GOOG)(GOOGL) and Tesla (TSLA). Coming in with high expectations, investors focused on areas of concern surrounding Google’s parent company and its big spending. Meanwhile, the electric vehicle maker reported its fourth straight quarterly earnings miss and delayed its Robotaxi event until October. Its shares lost $97 billion in market value on Wednesday.

Economic data improved sentiment on Thursday and especially on Friday, helping Wall Street end the week on a positive note.

The U.S. Bureau of Economic Analysis reported that real gross domestic product (GDP) rose by a year-over-year 2.8% in the second quarter, a stronger-than-expected +2.0%. The core PCE price index also rose by 2.9%, slowing from +3.7% in the first quarter. Core PCE – widely considered the Federal Reserve’s preferred measure of inflation – rose by +0.2% m/m in June, matching the consensus estimate.

The Fed will be in the spotlight next week as it releases its latest decision on monetary policy interest rates. The central bank is expected to keep the federal funds rate steady but is also expected to pave the way for easing in September.

The second-quarter earnings season is also set to heat up, with a flood of reports expected from hundreds of companies, including Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Meta Platforms (META).

Turning to the weekly performance of the S&P 500 (SP500) sectors, seven of the 11 ended in the green, with defensive names Utilities, Materials and Health Care leading the gainers. They helped offset declines in Communication Services, Technology, Consumer Discretionary and Energy. Below is a breakdown of the performance of the sectors, as well as their companion SPDR Select Sector ETF, from the close of July 19 to the close of July 26:

#1: Tools +1.47%and Utilities Select Sector SPDR Fund ETF (XLU) +1.48%.

#2: Materials +1.37%and the Materials Select Sector SPDR Fund ETF (XLB) +1.35%.

#3: Healthcare +1.35%and the SPDR Select Sector Health Care ETF (XLV) +1.41%.

#4: Finance +1.28%and the Financial Select Sector SPDR Fund ETF (XLF) +1.31%.

#5: Industry +1.14%and the Industrial Select Sector SPDR Fund ETF (XLI) +1.15%.

#6: Basic Products +0.55%and the Consumer Staples Select Sector SPDR Fund ETF (XLP) +0.51%.

#7: Real Estate +0.54%and the Real Estate Select Sector SPDR Fund ETF (XLRE) +0.54%.

#8: Energy -0.24%and the Energy Select Sector SPDR Fund ETF (XLE) -0.19%.

#9: Consumer Discretionary -2.32%and the SPDR Select Sector Consumer Discretionary Select Sector ETF (XLY) -2.77%.

#10: Information Technology -2.44%and the Technology Select Sector SPDR Fund ETF (XLK) -2.08%.

#11: Communication Services -3.76%and the Communication Services Sector Fund SPDR (XLC) -1.66%.

Investors interested in the future should check out Seeking Alpha’s Catalyst Watch report, which highlights key events to watch for next week.

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