The SPX Ended its Five-week Win Streak But is Still Up For May

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Table of Content:

1.    Major indexes weekly performance 

2.    Major indexes monthly performance for May 

3.   S&P 500 sector index weekly performance 

4.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week ended May 31, the U.S major indexes closed lower over the holiday-shortened week but rounded out a month of gains. The S&P 500(SPX) ended its five-week win streak but is still up for May as investors maintain subdued expectations for Fed rate cuts. The technology-heavy Nasdaq Composite(COMP) was especially weak, due in part to a sharp decline in cloud software provider Salesforce(CRM), which fell sharply after releasing first-quarter revenues that missed consensus estimates. Markets were shuttered Monday due to public holiday. Refer to below major indexes weekly performance table.

In this May, all major indexes but one-SSE index in my watchlist closed with gains. The technology-heavy Nasdaq Composite Index(COMP) outperformed with 6.9% gains. Refer to below major indexes monthly performance table for May.

Key highlights for the week and next:

1.    Inflation check. This week’s most notable economic calendar was personal consumption expenditure (PCE) price index report, released Friday morning. PCE rose 0.3% overall in April, meeting analysts' forecasts. Core (less food and energy) PCE prices - widely considered the Federal Reserve’s preferred inflation gauge rose 0.2% in April, down slightly from the previous two months and seemingly a period of calming inflation pressures following January’s 0.5% spike.

2.    Interest rate. On Friday, traders priced approximately 53% odds the fed funds rate will be at least one quarter-point lower following the FOMC's September meeting, up from around 50% a day ago, based on the CME FedWatch Tool. The tool priced a nearly 100% chance the rate will be unchanged after the June FOMC meeting. The market also awaits the June 11–12 Federal Open Market Committee (FOMC) meeting, which is expected to end with no change to the funds rate.

SPX sectors in play

Eight out of the 11 sectors of SPX closed with gains. Small-caps performed better than large-caps, and value stocks held up better than growth shares. Utility(XLU) and Energy(XLE) outperformed this week. Technology(XLK) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both SPX and COMP ended their 5-week win streak and closed lower this week. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks were little changed after an unexpectedly weak manufacturing reading highlighted growth headwinds on the economy. The Shanghai Composite Index(SSE) edged lower 0.07%, while the blue chip CSI 300 gave up 0.6%. In Hong Kong, the benchmark Hang Seng Index fell 2.84%. (Refer to the above weekly performance table).

Key highlights for the week and outlook for China/HK:

1.    The official manufacturing purchasing managers’ index (PMI) fell to a below-consensus 49.5 in May from 50.4 in April, marking the first monthly contraction since February. The nonmanufacturing PMI, which measures construction and services activity, slipped to a weaker-than-expected 51.1 from 51.2 in April amid slower construction growth. Separately, profits at industrial firms rose by 4% in April from a year ago and recovered from a 3.5% decline in March, according to the National Bureau of Statistics. 

2.    Although both PMI readings underscored pockets of weakness in China’s economy, most economists believe that China will meet its growth target this year of around 5%. Earlier in the week, the International Monetary Fund upgraded its 2024 economic growth forecast for China to 5%, up from its April projection of 4.6%, following Beijing’s support measures and a stronger-than-expected first-quarter expansion. 

3.    Officials in Shanghai announced measures to shore up homebuying demand in China’s largest city. Measures included lowering the minimum down payment ratio for home purchases, reducing the minimum interest rates on first home mortgages, and relaxing social insurance and income tax payment requirements for non-Shanghai residents. Other major cities expected to follow up.

Hang Seng Index component stocks weekly return:

Click below title to view weekly charts.

SSE weekly chart

HSI weekly chart

Singapore

STI index gained 0.6% for the week despite other major indexes in the rea of red. The index has had its three week win streak so far and appears bullish with more room to upside. Immediate resistance level is around 3400, immediate technical support 3300 level.

STI Index component stocks weekly return:

STI weekly chart

Source: Some contents and data excerpted from various public market reports.