The U.S. dollar index, a weighted geometric index of the value of the U.S. dollar relative to a basket of six major currencies, gapped up 0.45% at the open on Tuesday and surged to an intra-day high of 97.47, up 1.42%, as the currency market further digested the previous Friday’s speech by Federal Reserve Chair Janet Yellen and news that Greece might miss next month’s debt payment to the IMF.

The U.S. dollar might also have gotten some lift from Tuesday’s Commerce Department report on durable goods, showing a decline of 0.5% in April, but matching the median forecast of economists surveyed by Bloomberg. The report showed that shipments for non-defense capital goods excluding aircraft, which is used in calculating gross domestic product, rose 0.8% in April after a 1% increase in March. Consecutive gains in orders of non-defense capital goods prompted economists at Barclays in New York to revise their estimate for U.S. second-quarter GDP, to 2.7% from 2.5%. 

The S&P 500, which recently traded in an inverse correlation with the U.S. dollar index, tumbled 1.26% on Tuesday to an intra-day low of 2,099.18 before bouncing back and closed at 2,104.20, below the key technical resistance of 2,120. The S&P 500 traded between the trendline support and 2,120 level for the rest of the week as it awaited the release of two key economic data reports on Friday, the second estimate of the first-quarter GDP and the April Chicago Purchasing Managers Index (PMI).

The U.S. dollar index was surprisingly unchanged on Friday after the U.S. Department of Commerce revised the second estimate of the first-quarter GDP to a negative 0.7% from the initial reading of 0.2% gain. The Fed’s Yellen expected the U.S. economy to strengthen while Wall Street economists forecasted the first-quarter GDP second reading to contract 0.9%. It turns out that the San Francisco Federal Reserve got it all wrong as they argued last week that based on their estimation, the U.S. actually grew 1.8% during the quarter. 

More bad economic news was reported on Friday, as the Chicago PMI plunged in May to a reading of 46.2 from 52.3 in April, below the three-month moving average of 48.3. A number below the 50-point threshold signals that the economy shrank for the region. The S&P 500 sold off 0.63% on Friday after digesting the mixed economic news. 

For the week, the U.S. dollar index surged 0.91%, on top of the 3.14% gain last week, to close at 96.986 on Friday, while the 10-year U.S. Treasury bond yield tanked 4.13% for the week and printed at 2.123% at the close on Friday. The S&P 500 closed down 0.88% for the week, at 2,107.39 on Friday. 

The best performing S&P 500 sector for the week was Healthcare, down 0.02%, as the hedge funds are getting out of the energy-healthcare trade. The worst performing sectors for the week were Energy and Industrials, down 2.05% and 1.94%, respectively. 

From our technical viewpoint, the S&P 500 pulled back below the 2,120 resistance level as the U.S. dollar index broke out the 50-day SMA at 96.81. The U.S. jobs report, due to be released on Friday June 5, could give some clarity for when the Fed will actually begin hiking the rate. The S&P 500 could pull back further as the U.S. dollar is continuing to gain upward momentum. The near-term technical head resistances are 2,120, 2,135 and 2,147 while 2,099 or 50-day SMA, 2,092 and 2,080 or 100-day SMA, become the near-term support.

S&P 500 Summary: +2.36% YTD as of 05/29/15
Barclay Hedge Fund Index: +3.64% YTD 

Outperforming Sectors: Healthcare +9.19% YTD, Consumer discretionary +5.53% YTD, Information technology +4.55% YTD, Materials +3.75% YTD and Telecommunication services +2.99% YTD.

Underperforming Sectors: Consumer staples +0.1% YTD, Financials –0.83% YTD, Industrials –1.44% YTD, Energy –2.59% YTD and Utilities –6.44% YTD.