S&P 500 snaps three-week win streak with slight fall ahead of Good Friday jobs report

The S&P 500 (SP500) on Thursday ended marginally lower by 0.10% at 4,105.02 points for the holiday-shortened week, posting gains in two sessions and losses in the other two. Its accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) slipped 0.05% for the week.

The benchmark index snapped a run of three successive weeks of gains with the slight underperformance, as market participants appeared to be mostly non-committal ahead of the nonfarm payrolls report due on Good Friday.

Economic data through the week pointed to cooling in both the industry and the labor market. It has sparked concerns that the Federal Reserve's rate-hiking campaign has been too aggressive and that a rapid curtailing of the economy can lead to recession.

Investors parsed a greater-than-anticipated drop in the ISM manufacturing purchasing managers index and a more-than-expected drop in a key gauge of economic activity in the services sector. The labor market was in the spotlight after the JOLTS report showed much lower-than-forecasted job openings, the ADP private payrolls report added less than expected, and the number of Americans filing for initial jobless claims declined.

Traders have mostly been in a risk-off mood, snapping up safe stocks such as utilities and other defensive sectors, along with other assets such as bonds - sending Treasury yields to multi-month lows - and gold.

At the same time, inflation expectations have had to be readjusted somewhat after the oil-producing OPEC+ nations, including Saudi Arabia and Russia, last Sunday agreed to a surprise production cut, leading to massive gains in crude prices (CL1:COM) (CO1:COM) and a big jump in energy stocks. For the Fed, higher oil prices would mean higher inflation, which would put pressure on them to keep rates elevated.

Speaking of rates, markets have continued to fluctuate in their expectations regarding the central bank's move at its next monetary policy committee meeting in May. The chances have kept swinging back and forth in favor of no hike to a 25 basis point hike. According to the CME FedWatch tool, the odds currently stand at almost exactly 50/50.

"As investor sentiment swings from hard economic landing to soft landing, from sticky inflation to lower inflation, and from believing the Fed will keep rates higher for longer to the potential of a pivot, the market has swung back and forth from pessimism to optimism," Keith Lerner, co-chief investment officer at Truist, said in a note on Wednesday.

"Strength in the mega cap growth stocks has aided market performance this year, given their large weighting in market indices. However, market strength is less apparent below the surface as only 36% of stocks within the S&P 500 are outperforming the index itself over the past three months," Lerner added.

Turning to the weekly performance of the S&P 500 (SP500) sectors, six ended in the red, led by Industrials and Consumer Discretionary. Defensive stalwarts Utilities and Health Care topped the gainers, while the Energy sector also ended with gains, helped mainly by the reaction to the OPEC+ output cut. See below a breakdown of the weekly performance of the sectors as well as their accompanying SPDR Select Sector ETFs from March 31 close to April 6 close:

#1: Utilities +3.11%, and the Utilities Select Sector SPDR ETF (XLU) +3.13%.

Sub-sector Electric Utilities which contributes 65% to the index was up 3.08% and multi-utilities which contribute 29% to the index was 3.3% higher.

#2: Health Care +3.08%, and the Health Care Select Sector SPDR ETF (XLV) +3.14%.

Pharmaceuticals, Biotechnology & Life Sciences which contributes 58% to the index was up 2.8%, while balance contributor, Health Care Equipment & Services was up 3.49% during the week.

#3: Energy +3.03%, and the Energy Select Sector SPDR ETF (XLE) +2.60%.

Oil, Gas & Consumable Fuels that contributes 91% to the index is up 3.2%.

#4: Communication Services +2.33%, and the Communication Services Select Sector SPDR Fund (XLC) +1.66%.

Media & Entertainment sub-sector index, which contributes 85% to the index is up 2.37% during the week.

#5: Consumer Staples +0.91%, and the Consumer Staples Select Sector SPDR ETF (XLP) +0.87%.

Food, Beverage & Tobacco which contributes 54% to index was up 0.95% for the week.

#6: Financials -0.65%, and the Financial Select Sector SPDR ETF (XLF) -0.50%.

Banks continue to drag financial index lower, with sub-sector bank index down 1.9% over the week. Diversified Financials which contributes 46% to the index was also lower 0.7%, however 1.46% gain from Insurance sub-sector partially off-set losses by banks and diversified financials.

#7: Real Estate -0.77%, and the Real Estate Select Sector SPDR ETF (XLRE) -0.75%.

Sib-sector Equity Real Estate Investment Trusts (REITs) were down 0.7% during the week.

#8: Information Technology -1.15%, and the Technology Select Sector SPDR ETF (XLK) -1.28%.

Semiconductors & Semiconductor Equipment sub-sector took a hit losing 4% over the week, Technology Hardware & Equipment down 0.7% partially off-set by 0.22% gain in Software & Services.

#9: Materials -1.26%, and the Materials Select Sector SPDR ETF (XLB) -1.28%.

Chemical sub-sector which contributes 68% to the index is down 1% over the week.

#10: Consumer Discretionary -2.95%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) -3.08%.

Retailing sub-sector which accounts slightly more than 50% to the index is down 1.26%.

#11: Industrials -3.37%, and the Industrial Select Sector SPDR ETF (XLI) -3.37%.

Capital Goods sub-sector fall of 4% during the week dragged industrial stock lower.

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