S&P had the worst week in a year and a half due to the decline in September and concerns about growth.

S&P 500 (SP500) fell 4.25% on Friday, shortened week due to public holiday, and closed at 5,408.42 points, falling in all 4 sessions. The associated SPDR S&P 500 ETF Trust (NYSEARCA:SPY) fell 4.14% for the week.

It was simply a tough week for Wall Street, which could not be expressed in sweet words. The benchmark index recorded its worst weekly performance since early March 2023. The tech-heavy Nasdaq Composite Index (COMP:IND) fared even worse, marking its worst week since January 2022.

According to Bespoke Investment Group, both benchmarks saw their worst start in September (first 4 trading days) since 2001.

Selling pressure increased this week, particularly due to a series of weak data on the labor market, raising concerns about economic growth. Combined with the historical weakness in September, this resulted in investors retreating from growth sectors like technology and flocking to safe assets like bonds.

The S&P 500 information technology sector fell more than 7% this week. Meanwhile, as traders flocked to buy bonds, US bond yields declined. The 10-year bond yield (US10Y) fell 20 basis points this week, while the 2-year bond yield (US10Y) fell 27 basis points.

On Tuesday, weak manufacturing data greeted investors returning from the long Labor Day weekend. This was enough to undermine the positive sentiment that had been permeating the market since the end of August. The three major indices on Wall Street ultimately had their worst day since "Black Monday" in 2024.

Then on Wednesday, government data showed that job openings in July fell to their lowest level in three and a half years. This was followed by Challenger, Gray & Christmas reporting that job cuts in August were nearly three times higher compared to July. These two indicators worsened the mood heading into the important nonfarm payroll report on Friday.

When that data finally arrived, the employment numbers for August fell below expectations, and the figures for June and July were significantly revised downwards. This report further fueled concerns about growth and sparked a debate among experts on how much the Federal Reserve should cut interest rates at its meeting later this month. Attention has now shifted to next week's consumer price index report for further clues, although inflation has taken a backseat as a concern.

"In recent years, there have been employment reports that the market eagerly follows, and then there are those that make you think afterwards. The employment report on Friday is the former, and there is no doubt about the importance of the market's reaction," said Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock, on X (formerly Twitter).

"Amid the incorporation of term premiums ahead of important data releases, it is clear that the market's focus has shifted from inflation to labor market data. It is evident that labor market data has become the most important focus for both the market and the Federal Reserve, with labor market data expected to outpace inflation," he added.

"Recent labor market data is clearly weak, but it is far from the dire indicators that would suggest an economic downturn, a hard landing, or a bleak precursor to future consumer weakness. Rather, we continue to believe that the job market is easing amid robust demand after the pandemic. In fact, most of the recent increase in unemployment is not permanent unemployment, but rather temporary (weather-related) layoffs in August (to be reversed this month) and a steady flow of new entrants," said Rieder.

Looking at the weekly performance of the S&P 500 (SP500) sectors, 9 out of 11 sectors ended in the red. Technology saw the highest decline with a drop of 7.1%. Consumer staples and real estate were the two sectors that saw gains. The breakdown of sector and related SPDR Select Sector ETF performance from the closing of August 30th to the closing of September 6th is as follows:

#1: Consumer staples: +0.56%, Consumer Staples Select Sector SPDR Fund ETF (XLP): +0.58%.

#2: Real estate +0.15%, real estate select sector SPDR fund etf (XLRE) +0.18%.

#3: Utilities industry -0.50%, utilities sector select SPDR fund etf (XLU) -0.50%.

#4: Health care -2.13%, health care select sector SPDR fund etf (XLV) -2.07%.

#5: Consumer discretionary -2.86%, consumer discretionary select sector SPDR etf (XLY) -2.52%.

#6: Finance -3.20%, finance select sector SPDR fund etf (XLF) -3.17%.

#7: Industrial -4.35%, industrial select sector SPDR fund etf (XLI) -4.24%.

#8: Materials -4.84%, materials select sector SPDR fund etf (XLB) -4.66%.

#9: Telecom services -5.05%, telecom services select sector SPDR fund (XLC) -4.07%.

#10: Energy -5.63%, Energy Select Sector SPDR Fund ETF (XLE) -5.77%.

#11: Information Technology -7.06%, Technology Select Sector SPDR Fund ETF (XLK) -7.45%.