Welcome to our comprehensive weekly market summary. In this edition, we dissect the latest shifts and developments in the U.S. stock market, focusing on the Standard & Poor's 500 index and other pivotal sectors that shape the financial landscape. This week was marked by considerable volatility, with notable declines in consumer discretionary and communication services sectors. Let's delve deeper into the week's events and their implications.

Market Performance Overview

The S&P 500 experienced a turbulent week, closing at 6,013.13, marking a 1.7% decline over the past five days. This downturn has nudged the index into negative territory for February, down by 0.5%, although it still maintains a 2.2% gain for the year. The consumer discretionary sector bore the brunt of the losses, shedding 4.3%, while communication services weren't far behind, with a 3.7% drop. These declines were pivotal in shaping the overall market performance.

Consumer Discretionary and Communication Services

The consumer discretionary sector was particularly affected this week, primarily due to significant losses in the travel and leisure segment. Cruise operators such as Royal Caribbean Cruises (RCL) and Carnival (CCL) experienced substantial declines, with each company's stock plummeting by approximately 11%. These losses were largely attributed to the newly proposed tax considerations put forth by Commerce Secretary Howard Lutnick, which have sparked concerns over increased operational costs and potential impacts on profit margins.

Other Sectors' Performance

While the consumer discretionary and communication services sectors struggled, other areas of the market managed to post gains. The utilities sector emerged as a bright spot, rising by 1.4%. This performance was largely driven by American Electric Power (AEP), which saw its stock increase by 3.4%. The company's upward trajectory was supported by a favorable price target adjustment from Morgan Stanley, reflecting optimism about its growth prospects and resilience in a fluctuating economic environment.

The energy and health care sectors also recorded modest gains, each rising by 1.1%. Devon Energy (DVN) led the charge in the energy sector, with its stock climbing by 8.2% after the company surpassed earnings expectations. This positive result was bolstered by strong production numbers and favorable market conditions, underscoring the sector's potential for robust performance even amid broader market challenges.

Economic Data Highlights

This week's economic data releases painted a mixed picture of the U.S. economy. Existing home sales and housing starts both declined, impacted by persistently high mortgage rates and rising property prices. These factors continue to weigh on affordability and buyer sentiment, posing challenges for the housing market's recovery.

Looking ahead, several key economic indicators are on the horizon. February's consumer confidence report will provide insights into consumer sentiment and spending intentions, while January's personal consumption expenditures will offer a glimpse into inflationary pressures and consumer spending patterns. Additionally, revised Q4 GDP figures will shed light on the economy's growth trajectory as we progress through 2025.

SPX Analysis

The S&P 500's technical chart revealed signs of instability following Friday's market activity. Despite the emergence of a promising bull flag pattern earlier in the week, the index struggled to maintain upward momentum, ultimately retesting support levels and closing below 6,027. This development has introduced uncertainty into the market, with traders and analysts closely monitoring the index's performance for potential signals of further declines.

As we move into next week, the focus will be on whether the S&P 500 can successfully retest the 6,027 support level. A failure to hold this level could open the door to additional selling pressure, potentially presenting a shorting opportunity for traders if the downward trend persists. Conversely, a bounce from these levels could signal a resurgence of buying interest, setting the stage for a potential recovery.

Looking Ahead

The upcoming week promises to be eventful, with a packed earnings calendar featuring several high-profile companies. Home Depot (HD), Intuit (INTU), NVIDIA (NVDA), and Berkshire Hathaway (BRK.A, BRK.B) are among the notable names scheduled to report their quarterly results. These earnings announcements will be closely scrutinized for insights into corporate performance, sector-specific trends, and broader economic conditions.

In addition to earnings, investors will be paying close attention to forthcoming economic data releases. February's consumer confidence report, revised Q4 GDP figures, and January's personal consumption expenditures will provide valuable insights into the health of the economy and prevailing inflation trends. These data points will be critical in shaping market sentiment in the weeks ahead.