Last week, escalating geopolitical tensions and inflation concerns rocked Wall Street, causing the three major indices to end the week with losses. The S&P 500 dropped 1.5%, marking its worst performance since October 2023. Major bank shares also declined after disappointing quarterly earnings reports, adding to the market chaos.
All 11 major sectors in the S&P 500 finished the week in negative territory for the first time since September 2023. The SPDR S&P 500 ETF Trust (SPY) mirrored the index’s performance, shedding 1.5% for the week. Despite the overall decline, there are some stocks within the ETF with strong Zacks Rank #1 (Strong Buy) or #2 (Buy) ratings, indicating a good potential entry point. These include Globe Life Inc. (GL), Arista Networks Inc. (ANET), Fastenal Company (FAST), Invesco Ltd. (IVZ), and Deckers Outdoor Corporation (DECK).
Geopolitical tensions in the Middle East escalated over the weekend as Iran launched missiles and drones on Israel, heightening fears of a broader conflict in the region. This conflict is expected to lead to a spike in oil prices, potentially fueling inflation and causing the Federal Reserve to reconsider rate cuts.
Despite positive economic data suggesting a strong economy, higher consumer prices in March have dampened hopes for imminent rate cuts by the Fed. This has raised the possibility of prolonged higher interest rates.
Major banks like JPMorgan Chase & Co (JPM), Citigroup (C), and Wells Fargo (WFC) disappointed investors with their quarterly results. JPMorgan’s net interest income fell short of expectations, while Wells Fargo reported a profit decline due to poor borrowing demand and Citigroup experienced a loss after incurring expenses on employee terminations and deposit insurance.
The SPDR S&P 500 ETF Trust holds a diversified portfolio of 503 stocks, with each holding accounting for no more than 7.3% of the total assets. The ETF has exposure to various sectors, including information technology, financials, healthcare, and consumer discretionary.
Overall, last week’s market performance was impacted by a combination of geopolitical tensions, inflation concerns, disappointing bank earnings, and ongoing uncertainty. Investors should closely monitor the evolving situation and consider their investment strategies accordingly.