Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 01/08” will be posted around 8:30am EDT, Tuesday.
THE GIST (“THE WHAT”)
Building on previous session’s Fed-induced rally, the S&P 500 index extended gains on hopes that the resumption of the U.S. – China trade negotiations could result into a resolution to their year-long dispute. Retail stocks were the best gainers of the session, followed by Energy stocks that rallied alongside a surge in oil prices.
Opening the session on a subdued note, the index gained a solid upward momentum. Gains, however, faded in the afternoon session on registering the day’s high at 2566.16 as optimism remained capped amid the ongoing political drama in the White House. With nine out of the eleven primary sectors ending the session higher, the index closed yet another volatile trading session off of session highs at 2549.69, up 17.75 points and gaining 0.70% over previous session’s close.
THE DETAILS (The “How & Why”):
Consumer Discretionary led the broader index higher, driven by a 3.44% rise in Amazon.com Inc. that led the e-commerce giant to become the world’s most publically valued company at $796.78 billion. Retail and departmental chain stocks were among the top gainers of the session, extending gains following an upbeat employment data last week that eased fears of an imminent recession. Mattel Inc., Chipotle Mexican Grill Inc. and Ulta Beauty Inc. were the best performers within the sector, gaining 7.68%, 6.63% and 6.26% respectively.
Energy sector benefitted from surging oil prices on the back of a weakening dollar, further fueled by reports that Saudi Arabia plans to reduce its oil exports by 800,000 barrels per day. Hess Corp and Cabot Oil& Gas Corp led the sector higher with a 4.79% and 4.06% gain.
Advanced Micro Devices Inc. and NVIDIA Corp led semiconductor stocks higher on trade optimism, up 8.26% and 5.29%, to lift the broader Technology sector higher by 0.86%. Netflix Inc. was also a strong performer within the sector, soaring 5.97% following bullish comments by an analyst, citing strong web-search trend data for the streaming-video company.
Other notable gainers of the session were Real Estate, Industrials and Health Care sectors, all closing the session higher by 0.79%, 0.68% and 0.41%. The dollar extended its slide, boosting metals and commodity prices across the board and benefitting the Materials sector to close the session modestly higher by 0.32%. Banks and Financial stocks also gained alongside rising treasury yields that edged higher with the rising risk appetite in today’s session.
On the other hand, offsetting some of these gains were Utilities and Consumer Staples, down 0.71% and 0.28%, respectively. PG&E Corp was the worst performer of the session, plunging 22.34% on reports that the California utility plans to file for bankruptcy protection from potential liabilities close to $30 billion from the deadliest wildfires caused by one of its faulty instrument.