Market Insights

Stocks just had their sharpest rally of the year as investors looked for the Federal Reserve to cut interest rates.

The S&P 500 surged 4.4 percent between Friday, May 31, and Friday, June 7, its best week since late November. The surge came after buyers defended March’s low and erased most of the previous month’s drop. Every major sector advanced.

Voting members of the Fed Jerome Powell, Richard Clarida and James Bullard lifted sentiment early in the week by indicating they would lower interest rates if the economy weakens. Then almost on cue, key employment reports from the Labor Department and ADP were far below consensus.

That caused traders to quickly price in a 25-basis point rate cut on July 31, with a smaller number expecting a move as early as next week. Bonds, which go up when rates go down, rallied, and the U.S. dollar fell. Money also streamed into foreign stocks and precious metals. That’s a common response to a dovish Fed.

Materials led the charge and had their best week since 2009. Technology was the second-best performer as heavily traded names like Apple (AAPL), Tesla (TSLA) and Nvidia (NVDA) bounced from lows. Homebuilders, airlines and solar-energy stocks also outperformed.

Decliners Few and Far Between

If you’re looking for decliners, there weren’t many last week. No major index or sector dropped, and just 21 members of the S&P 500 lost value over the time frame.

Several other important things happened, aside from the Fed. The week began with major technology/communications stocks Alphabet (GOOGL) and Facebook (FB) crashing on reports of anti-trust actions by the Justice Department. Both were among the handful of losers in the week.

Other economic reports were mostly negative. Oil clawed back from biggest drop of the year after Saudi Arabia indicated OPEC would continue withholding crude from the market.

Central banks outside the U.S. were also dovish. The Europeans spoke of delaying rate hikes, while India and Australia eased. Still, the U.S. dollar pushed lower thanks to the Fed.

Beyond Meat Blasts Higher

Two recent initial public offerings (IPOs) rallied. Beyond Meat (BYND) surged 33 percent and is up more than 400 percent from its initial price. Zoom Video Communications (ZM) also spiked 18 percent. Debut earnings reports from both indicated their growth stories are playing out.

Campbell Soup (CPB) was the biggest gainer in the S&P 500. The food company rallied 19 percent after enjoying a quick boost from its Snyder’s Lance snack-food acquisition. Advanced Micro Devices (AMD) was the second-best performer, up 18 percent after a big upgrade by Morgan Stanley.

Health insurer Centene (CNC) led to the downside with a 6 percent drop after takeover speculation fell through.

Quieter Week Ahead

This week is quieter, but there are still some important events.

Chinese trade data, scheduled for Sunday night, may have some impact on sentiment because of President Trump’s tariffs against the country.

Tomorrow brings producer-price inflation, followed by consumer prices the next morning. Crude oil inventories are also due Wednesday. Lululemon Athletica (LULU) reports in the afternoon.

Thursday’s big items are initial jobless claims and Broadcom (AVGO) earnings.

Retail sales, industrial production and consumer sentiment wrap things up Friday morning.