S&P 500 posts best week in 2 months with 1.7% gain

The S&P 500 rose 1.7% to 7,547 last week, its best weekly gain in two months, after a weaker-than-expected jobs report eased rate-hike fears.

"Sector rotation is a healthy development, allowing richly valued names to consolidate while laggards catch up," the research team at IG said in a note. "Market breadth continues to improve, with both the advance/decline line and the share of S&P 500 constituents above their 200-day moving average trending higher."

The Dow Jones Industrial Average outperformed, climbing 2% to a record close of 52,900, while the tech-heavy Nasdaq 100 lagged with a 0.7% gain as AI hardware stocks came under pressure. The US 10-year Treasury yield fell to 4.49% as the payrolls miss reduced expectations for tighter monetary policy, while gold surged 2.3% to $4,121 an ounce. Financials and industrials led sector gains, while technology and communication services trailed as investors rotated out of megacap growth names. The Russell 2000 index of small-cap stocks rose 0.6% to 3,024, reflecting the broadening of the rally beyond the largest companies.

The rally pushed the Dow's relative strength index toward 70, approaching overbought territory, with Fibonacci-based resistance at 53,988 representing the next upside target. Investors now turn to this week's US ISM services PMI and China CPI data, along with earnings from PepsiCo and Delta Air Lines, for clues on whether the broadening rally can sustain momentum through the second-quarter reporting season.

The advance marked a reversal from the prior month's narrow leadership, with the share of S&P 500 constituents trading above their 200-day moving average rising alongside the advance/decline line. West Texas Intermediate crude edged lower to $68.46 a barrel as supply concerns eased, while Bitcoin reclaimed the $61,000 level, trading at $62,840, as the softer labor market data weakened the dollar. The VIX retreated during the week, reflecting the decline in macro uncertainty after the payrolls release, though the Dow's RSI near 70 suggests caution on further near-term upside.

The rotation into cyclical and defensive names points to a shift in market leadership that could persist if economic data continues to support a soft-landing narrative. The payrolls miss, while reducing rate-hike risks, also raises questions about the pace of economic growth — a dynamic that will be tested by this week's ISM services print, with economists expecting a moderation to 53.5 from May's 54.5 reading. A sharper-than-expected cooling in services activity could reinforce the case for the Fed to hold rates steady through year-end, while a sticky reading would keep the door open for further tightening.

On the earnings front, Delta Air Lines kicks off the airline reporting season on Thursday, with investors focused on how the recent jet fuel price spike is affecting margins. PepsiCo reports Wednesday, offering a read on consumer health after the company's price cuts aimed at sustaining North American volume recovery. Both reports will provide early indications on whether corporate margins can hold up as input costs and labor expenses remain elevated.

The week's data calendar also includes China's CPI and PPI on Thursday, with producer prices expected to remain elevated at 3.9% year-over-year as commodity costs rise, while consumer inflation is seen holding at 1.2%. The wide gap between producer and consumer prices points to fragile domestic demand, with companies reluctant to pass on higher input costs — a dynamic that could pressure margins for Chinese manufacturers and ripple through global supply chains.

This article is for informational purposes only and does not constitute investment advice.