S&P 500 adds ~0.8% for the week amid favorable inflation data, start of Q1 earnings (SPY)

The S&P 500 (SP500) on Friday closed 0.79% higher for the week at 4,137.64 points, posting gains in two sessions, losses in two and ending flat in one. Its accompanying SPDR S&P 500 Trust ETF (NYSEARCA:SPY) advanced 0.80% for the week.

The benchmark index put in a shaky performance on Monday and Tuesday, as market participants digested last week’s Good Friday jobs report which indicated that the labor market remained tight. Investors remained largely non-committal ahead of the highly anticipated consumer price index report for March on Wednesday.

Inflation, as expected, took up a chunk of the spotlight this week, with the March CPI report followed by the producer price index report on Thursday. Both gauges moderated, with the headline CPI number falling a full percentage point from February and the headline PPI number posting an unexpected decrease.

The data suggested that the Federal Reserve’s aggressive rate-hiking campaign was having its intended effect in cooling the economy. Adding strength to that narrative, figures on Wednesday showed that the Atlanta Fed’s business inflation expectations for the year-ahead decreased.

Moreover, statistics on Thursday showed that the number of Americans filing for initial jobless claims in the past week rose, raising hopes of some loosening in the highly resilient labor market.

Despite the several favorable economic datapoints, Fed speakers remained largely cautious during the week. San Francisco Fed President Mary Daly and Fed Governor Christopher Waller both said that further policy tightening could be warranted. Conversely, minutes of the central bank’s March monetary policy committee meeting published on Wednesday showed that several officials considered pausing rate hikes in the light of the recent banking crisis.

According to the CME FedWatch tool, markets now see a ~83% chance of a 25 basis point hike at the Fed’s May meeting, followed by a small ~13% chance of another 25 bp hike in June.

Investors during the week also focused on the start of the first-quarter earnings season. Delta Air Lines (DAL) on Thursday posted a mixed performance but provided optimistic guidance. Big banks took centerstage on Friday, with JPMorgan (JPM), Citigroup (C) and Wells Fargo (WFC) smashing expectations across the board.

The season will pick up steam next week, with many household names on tap to report, including Tesla (TSLA), Netflix (NFLX), Johnson & Johnson (JNJ), Bank of America (BAC), Goldman Sachs (GS) and AT&T (T).

Turning to the weekly performance of the S&P 500 (SP500) sectors, seven ended in the green, led by Financials and Energy. Defensive sectors Real Estate and Utilities topped the losers. See below a breakdown of the weekly performance of the sectors as well as their accompanying SPDR Select Sector ETFs from April 6 close to April 14 close:

#1: Financials +2.86%, and the Financial Select Sector SPDR ETF (XLF) +2.81%.

#2: Energy +2.47%, and the Energy Select Sector SPDR ETF (XLE) +2.65%.

#3: Industrials +2.09%, and the Industrial Select Sector SPDR ETF (XLI) +2.11%.

#4: Materials +1.62%, and the Materials Select Sector SPDR ETF (XLB) +1.63%.

#5: Consumer Discretionary +1.31%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) +1.36%.

#6: Health Care +0.71%, and the Health Care Select Sector SPDR ETF (XLV) +0.79%.

#7: Communication Services +0.60%, and the Communication Services Select Sector SPDR Fund (XLC) +0.51%.

#8: Consumer Staples -0.25%, and the Consumer Staples Select Sector SPDR ETF (XLP) -0.24%.

#9: Information Technology -0.37%, and the Technology Select Sector SPDR ETF (XLK) -0.28%.

#10: Utilities -1.34%, and the Utilities Select Sector SPDR ETF (XLU) -1.32%.

#11: Real Estate -1.45%, and the Real Estate Select Sector SPDR ETF (XLRE) -1.35%.

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