The S&P 500 index fell for a second consecutive week amid sharp post-earnings sell-offs in Tesla and Alphabet as investors looked ahead to further mega-cap earnings and the Federal Reserve’s monetary policy meeting scheduled for this week.
Communication services and technology saw the steepest declines for the week among sectors, down 3.8% and 2.4%, respectively, while consumer discretionary fell 2.3%. Energy also saw a decline, while the remaining sectors posted gains, led by utilities’ 1.5% increase.
Communication services was dragged lower by a 6% drop in Alphabet. The Google parent’s Q2 results topped Wall Street’s expectations, though its management flagged caution about decelerating advertisement trends.
Tesla’s 8.1% decline following a Q2 earnings miss weighed on the consumer discretionary sector’s performance for the week.
Investors are now focused on major companies scheduled to report results this week, including Apple, Microsoft, Meta Platforms, and Amazon.
In economic news, the pace of US consumer spending growth eased last month, while the Fed’s preferred inflation metric held steady annually. The economy grew at a stronger-than-projected pace in Q2 as consumer spending accelerated while inflation cooled, according to an advance estimate released last week by the Bureau of Economic Analysis.
Markets are widely expecting the central bank’s monetary policy committee to hold interest rates steady this week, and deliver a 25-basis-point cut in September, according to the CME FedWatch tool.
Fed Chair Jerome Powell is expected on Wednesday to add to signs that the Federal Open Market Committee is close to easing monetary policy, Morgan Stanley said in a note to clients.
Powell said last week that policymakers shouldn’t wait for inflation to fall to 2% before reducing interest rates, while Fed Gov. Christopher Waller said the central bank was “getting closer” to cutting rates amid easing inflation.
This week’s economic calendar will feature official jobs data and the Institute for Supply Management’s US manufacturing sector report for July.
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