The stock market finished a relatively eventful week with only modest changes at the index level, as favorable inflation data and resilient participation helped offset pressure from rising oil prices and weakness across several mega-cap names. The S&P 500 gained 0.4% and reached fresh record highs during the week, while the Nasdaq Composite added 0.1% and the DJIA slipped 0.6%. Beneath the surface, the Russell 2000 and S&P Mid Cap 400 both gained 1.1%, outperforming the major averages.
Technology had a mixed showing. The information technology sector edged 0.2% higher and software fared somewhat better. Meanwhile, the broader mega-cap complex was subdued.
That relative weakness across the market's largest growth names weighed on communication services (-1.0%) and consumer discretionary (-2.0%), which were the week's weakest-performing sectors. Even so, the broader market held up well, with the Russell 2000 and S&P Mid Cap 400 each advancing 1.1% and reaching record highs during Friday's session.
Inflation data provided an important source of support as the week progressed. July CPI matched expectations, with headline prices increasing 0.1% and core prices rising 0.2%, while Thursday's PPI report came in slightly softer than expected. Together, the reports eased concerns that the Federal Reserve will need to raise rates yet in September, helping support growth and other rate-sensitive stocks through the middle of the week. Friday's weaker-than-expected retail sales report added another indication of softer economic activity, though a rise in longer-term Treasury yields limited the market's response.
Oil prices remained a significant counterweight throughout the week. WTI crude climbed roughly 5.5% amid continued uncertainty surrounding the U.S.-Iran conflict and the Strait of Hormuz, despite a sharp retreat on Thursday. The energy sector surged 7.3%, easily the week's best-performing S&P 500 sector. The utilities (+1.5%), consumer staples (+1.0%), health care (+1.0%), and financials (+0.9%) sectors also finished higher.
Treasury yields ultimately sent a mixed signal. The 2-year note yield declined four basis points for the week to 4.17%, consistent with reduced expectations for near-term Fed tightening, while the 10-year note yield rose four basis points to 4.70%.
Overall, the week's modest index-level changes masked considerably more movement beneath the surface. Better-than-feared inflation readings helped the S&P 500 establish fresh record highs, while strength in small- and mid-cap stocks pointed to broader participation beyond mega-cap growth. At the same time, higher oil prices, mixed technology performance, and elevated longer-term Treasury yields prevented those favorable developments from translating into a more substantial weekly advance.
Russell 2000: +1.1% week-to-date
S&P Mid Cap 400: +1.1% week-to-date
S&P 500: +0.4% week-to-date
Nasdaq Composite: +0.1% week-to-date
DJIA: -0.6% week-to-date