MT NewswiresMT Newswires

S&P 500 Posts 0.4% Weekly Gain as More Q2 Earnings, July Jobs Data Top Views But Add to Worries Over Rate Increases

The Standard & Poor's 500 index started August with a 0.4% weekly increase as more Q2 earnings reports as well as July US jobs growth surpassed estimates but added to concerns over the pace of future interest rate increases.

The market benchmark ended Friday's session at 4,145.19, up from last Friday's closing level of 4,130.29. However, the S&P 500 remains solidly in the red for 2022 with a year-to-date decline of 13%.

The week's slight gain comes after better-than-expected quarterly earnings fueled a relief rally in July, giving the S&P 500 its strongest month of gains since November 2020. Still, as worries persisted over rate increases, inflation and shrinking gross domestic product, all eyes were on Friday's payroll report.

The July jobs data showed US nonfarm payrolls rose by 528,000 last month, more than double the 250,000 increase that was expected in a survey compiled by Bloomberg, while June payrolls had an upward revision to a 398,000 increase.

The report also said the US unemployment rate fell to 3.5% in July from 3.6% in June, surpassing expectations for the rate to stay at 3.6%. This marks the first time the unemployment rate has been that low since February 2020, the last month before COVID-19 was declared a pandemic.

However, stocks fell slightly on the data, with the S&P 500 slipping 0.2% in Friday's session, as investors saw the larger-than-expected payroll gains as increasing the chances for the Federal Reserve's policy-setting committee to raise interest rates at a faster pace to tame inflation.

The technology sector had the largest percentage gain this week, up 1.9%, followed by advances of 1.2% each in the consumer discretionary and communication services sectors. Other sectors in the black included industrials, utilities and consumer staples.

On the downside, meanwhile, the energy sector weighed with a 6.8% tumble, followed by declines of 1.3% each in real estate and materials. Health care and financials were also in the red.

In the technology sector, shares of EPAM Systems (EPAM) soared 22% as the digital transformation services and product engineering company reported Q2 adjusted EPS and revenue above year-earlier results and analysts' expectations. The company also forecast Q3 results above analysts' mean estimates at the time.

The consumer discretionary sector's gainers included MGM Resorts International (MGM), whose shares rose 6% on the week. The casino operator reported Q2 adjusted earnings before interest, taxes, depreciation and amortization above analysts' mean estimate while revenue also topped the Street view.

In communication services, shares of Dish Network (DISH) jumped 11%. The satellite television company reported Q2 earnings per share above analysts' expectations despite a revenue miss. Investors were also pleased to hear the company's management discuss potential plans to raise capital on Dish's earnings call.

The energy sector's slide came as crude oil futures fell. Among the hardest-hit energy stocks, shares of APA Corp. (APA) fell 15% on the week despite the oil and gas company's report of better-than-expected Q2 adjusted EPS and revenue that also topped year-earlier results. Marathon Oil (MRO) was also among the decliners, down 12%, despite its report of Q2 adjusted EPS and revenue above year-earlier results and analysts' mean estimates.

Next week's earnings calendar features companies such as Dominion Energy (D), American International Group (AIG), Tyson Foods (TSN), Roblox (RBLX) and Walt Disney (DIS).

Economic reports in focus will include the July consumer price index to be released Wednesday, followed by the July producer price index on Thursday and the University of Michigan's preliminary reading of August consumer sentiment on Friday.