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Week in Review: May 29.2023 - June 2.2023

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June 5, 2023

Market Recap


The S&P 500 index posted a third straight weekly gain as the US Senate passed a bill to increase the debt ceiling, preventing a potential default, and markets evaluated a hotter-than-expected May jobs report. The benchmark index ended Friday's session at 4,282.37, up 1.8% from last Friday's closing level of 4,205.45. All sectors notched gains for the week, led by consumer discretionary and real estate, both up by more than 3% each.

The trading week began Tuesday as US markets were closed Monday for Memorial Day.

Investors cheered as the Senate reached an agreement on the US debt ceiling to cap government spending for two years, just days ahead of a potential default. President Joe Biden, who called the deal "a big win for our economy and the American people," was expected to sign the bill on Friday.

Data released Friday showed the US economy added 339,000 nonfarm payroll jobs last month, exceeding market expectations for a gain of 190,000, potentially creating uncertainty regarding the Federal Reserve's interest-rate decision later this month.

Other key US macro data released during the week showed manufacturing activity contracted in May amid declines in new orders, according to separate surveys from the Institute for Supply Management and S&P Global (SPGI). Job openings unexpectedly rose in April to the highest level in three months while layoffs fell.

The Fed's latest Beige Book showed economic activity was "little changed overall" in April and early May, while the growth outlook weakened slightly. The Conference Board said consumer confidence declined in May as views about current business conditions improved but labor market sentiment deteriorated.

The materials, industrials, health care and financials sectors gained more than 2% each for the week, with energy, technology and communication services up more than 1% each. Utilities rose 0.8% and consumer staples edged 0.3% higher.

Within consumer discretionary, a nearly 11% gain in Tesla (TSLA) shares helped offset some of the 40% loss from auto parts retailer Advance Auto Parts (AAP), which slashed its fiscal 2023 outlook. Tesla's billionaire Chief Executive Elon Musk made his first visit to China in almost three years in an effort to expand the company's business in the country.

Tech advanced 1.4% for the week despite a negative return from HP (HPQ) amid quarterly revenue miss. Nvidia (NVDA) contributed to the gain amid new artificial intelligence-focused product announcements. The chipmaker's market capitalization hit $1 trillion Tuesday.

The financials sector advanced 2.1% as the passage of the debt-ceiling bill helped lift several bank stocks late in the week. Industrials benefitted in part from contribution from American Airlines Group (AAL), which raised its Q2 financial outlook.

Consumer staples was marginally higher week-on-week, largely hit by a 19% plunge in discount retailer Dollar General (DG), which slashed its fiscal 2023 outlook amid macroeconomic headwinds. Communication services rose 1.1% with strong help from Match Group (MTCH), up nearly 14%, and Dish Network (DISH), which rose 9.6%.

The weekly gain in utilities came in part on the back of Constellation Energy's (CEG) agreement to acquire NRG Energy's (NRG) 44% stake in the South Texas Project Electric Generating Station nuclear plant in a $1.75 billion deal.

Health care rose 2.2% for the week, while energy added 1.3%. OPEC+ ministers are scheduled to meet over the weekend in Vienna amid signs of internal dissension as oil prices continue to weaken despite cuts of 1.2 million barrels per day that took effect at the start of May. Further production cuts are not expected as demand from China remains weak and Russia grabs market share in Asia from Saudi Arabia with discounted exports, according to media reports.

The economic calendar for this week features May services sector readings from the ISM and S&P Global, April factory orders, as well as the US international trade in goods and services for April.

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