The SPDR S&P 500 ETF Trust (SPY) fell 1.07% on Thursday, primarily due to a bleak U.S. jobs report and a decline in major technology stocks, such as AMD (AMD), Nvidia (NVDA), and Microsoft (MSFT). While the weak job data strengthened the case for a Fed rate cut in December, comments from Cleveland Fed President Beth Hammack, who cautioned that high inflation means the Fed should be careful about cutting rates again, added to market volatility.
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Within SPY’s holdings, the Energy and Healthcare sectors posted gains today, while the Consumer Discretionary, Technology, and Communication Services sectors declined.
Importantly, SPY closely tracks the S&P 500 Index (SPX), which ended 1.12% lower. Also, the tech-heavy Nasdaq 100 (NDX) fell 1.91%.
Key Catalysts That Can Move SPY
Looking ahead, the ongoing and historically long U.S. government shutdown is a potential catalyst for volatility in the SPY ETF. Any news suggesting a potential end to the shutdown could drive it higher.
Also, several Federal Reserve officials are scheduled to speak tomorrow, and their comments could impact investor sentiment and interest rate expectations.
Lastly, the University of Michigan Consumer Sentiment Index is due for release tomorrow. With delays in other economic data, traders will closely watch the report for insights into the economy’s health. If the report misses expectations, it can trigger volatility.
Fund Flows and Sentiment
SPY’s 5-day net inflows totaled $11 billion, showing that investors put capital in SPY over the past five trading days. Meanwhile, its three-month average trading volume is 72.90 million shares.
It must be noted that retail sentiment remains neutral, while hedge fund managers have increased their holdings of the SPY ETF in the last quarter.
SPY’s Price Forecasts and Holdings
According to TipRanks’ unique ETF analyst consensus, which is based on a weighted average of analyst ratings on its holdings, SPY is a Moderate Buy. The Street’s average price target of $776.23 for the SPY ETF implies an upside potential of 15.8%.
Currently, SPY’s five holdings with the highest upside potential are DuPont de Nemours (DD), Loews (L), Moderna (MRNA), Fiserv (FI), and Norwegian Cruise Line (NCLH).
Meanwhile, its five holdings with the greatest downside potential are Tesla (TSLA), Expeditors (EXPD), Paramount Skydance (PSKY), Incyte (INCY), and Applied Materials (AMAT).
Revealingly, SPY’s ETF Smart Score is eight, implying that this ETF is likely to outperform the broader market.
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