S&P 500 posts over 4% weekly loss after Fed rate hike; oil stocks top losers

The S&P 500 (SP500) on Friday posted a weekly loss of 4.65%, closing in the red for the second straight week, after the Federal Reserve’s third big rate hike in a row. The index posted losses in four out of five sessions this week.

The decline was led by energy stocks, which fell after WTI crude oil slid below $80/bbl for the first time since Jan.

The Fed raised its key lending rate by 75 bps to 3-3.25% as the central bank struggles to tame inflation. Investors appeared concerned that policymakers would be unable to engineer a soft landing as they plan more rate hikes. Most Fed officials expect the rate to top 4% by 2022-end, with further hikes expected in 2023, according to the central bank’s dot plot.

Goldman Sachs lowered its year-end outlook for the S&P 500 (SP500) by ~16% as the market is now pricing in a 4.6% terminal fed funds rate after FOMC’s decision this week.

Soon after the Fed’s move, the Bank of England raised its key rate by 50 bps to 2.25%, while the Swiss National Bank raised its benchmark rate by 75 bps to 0.5%. Meanwhile, the Bank of Japan kept its key rate at -0.1% and Turkey’s central bank unexpectedly slashed its key rate by 100 bps to 12%.

On the economic front, investors factored in higher-than-expected business activity, fewer initial jobless claims than forecast, and August housing starts rising more than estimates.

The SPDR S&P 500 Trust ETF (NYSEARCA:SPY) on Friday fell 4.57% for the week alongside the benchmark index. The ETF is -22.53 YTD.

All 11 sectors in the S&P 500 closed in the red for the week, led by energy stocks. See below a breakdown of the weekly performance of the sectors as well as the performance of their accompanying SPDR Select Sector ETFs from Sept. 16 close to Sept. 23 close:

#1: Energy -9%, and the Energy Select Sector SPDR ETF (XLE) -10.15%.

#2: Consumer Discretionary -7.02%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) -7.29%.

#3: Real Estate -6.44%, and the Real Estate Select Sector SPDR ETF (XLRE) -7.16%.

#4: Materials -5.67%, and the Materials Select Sector SPDR ETF (XLB) -6.13%.

#5: Financials -5.58%, and the Financial Select Sector SPDR ETF (XLF) -6.08%.

#6: Communication Services -5.1%, and the Communication Services Select Sector SPDR Fund (XLC) -5.81%.

#7: Industrials -4.55%, and the Industrial Select Sector SPDR ETF (XLI) -5%.

#8: Information Technology -3.59%, and the Technology Select Sector SPDR ETF (XLK) -3.86%.

#9: Health Care -3.38%, and the Health Care Select Sector SPDR ETF (XLV) -3.7%.

#10: Utilities -3.05%, and the Utilities Select Sector SPDR ETF (XLU) -3.64%.

#11: Consumer Staples -2.15%, and the Consumer Staples Select Sector SPDR ETF (XLP) -2.73%.

Below is a chart of the 11 sectors’ YTD performance and how they fared against the S&P 500. For investors looking into the future of what’s happening, take a look at the Seeking Alpha Catalyst Watch to see next week’s breakdown of actionable events that stand out.