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Stocks Book a Positive Week as Markets Digest Another Possible 75pbs Rate Lift

Weekly Update – September 09, 2022

  • The S&P 500 index rose 3.6% last week, changing direction after having tumbled a combined 8.3% in the previous three weeks.
  • The S&P 500 ended Friday’s session at 4,067.36, up from last Friday’s closing level of 3,924.26. This marks the index’s first week in the black since the week ended Aug. 12. However, the index is still solidly in the red for the year to date with a decline of 15% for 2022.
  • The weekly climb in US stocks came as investors grew more comfortable with the idea of another 75 basis-point rate increase by the Federal Open Market Committee as the policy-setting committee seeks to tamp down on inflation. Fed officials have made a number of comments in recent weeks indicating a rate increase of that size is likely to come this month following increases of 0.75 point each in June and July.
  • All of the S&P 500’s sectors rose last week. Consumer discretionary had the largest increase, up 5.6%, followed by a 4.9% climb in materials and gains of 4.4% each in financials and health care. Energy had the smallest increase, eking out a 0.6% rise.
  • Travel-related stocks were the best performers in the consumer discretionary sector as investors bet cruise operators and resort operators would benefit from consumers increasingly resuming travel following shutdowns earlier in the pandemic. Shares of Royal Caribbean Cruises (RCL) jumped 15% on the week, followed by a 13% rise in shares of Caesars Entertainment (CZR) and a 12% climb in shares of Norwegian Cruise Line (NCLH).
  • The materials sector’s gainers included shares of Albemarle (ALB), which climbed 16% amid price target increases from analysts at firms including RBC Capital Markets and Citigroup. RBC’s analysts cited “attractive supply/demand fundamentals” for the boost.
  • The energy sector’s modest gain came as futures in natural gas declined. Decliners included Williams (WMB), which said it has acquired NorTex Midstream, a fully contracted natural gas pipeline and storage asset in north Texas, from an affiliate of Tailwater Capital in a $423 million deal. Shares of Williams shed 2.8%.
  • Next week, all eyes will be on updated inflation data as the New York Fed’s three-year inflation expectations for August will be released Monday, followed by the August consumer price index on Tuesday and the August producer price index on Wednesday. Other data due next week include August retail sales on Thursday and the University of Michigan’s September reading of consumer sentiment on Friday.
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