Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 04/09” will be posted around 8:30am EDT, Tuesday.
THE GIST (“THE WHAT”)
Extending gains for the eighth straight session, the S&P 500 index logged its longest winning streak since October 2017 and is now only 1.56% away from all-time highs of September 2018. As investors brace for the first quarterly corporate earnings season beginning this week; weakness in Boeing Inc. and General Electric Company weighed down heavily during the early session.
Bouncing off the session lows of 2880.78, the index reversed early session losses and was led higher by rising Energy stocks. Sector-wise performance was mixed, with Energy and Consumer Staples leading the advances and Utilities and Real Estate sectors capping gains. A slow grind higher on a steady momentum lifted the index to close in positive territory at 2895.77, slightly higher by 3.03 points over previous day’s close.
Today’s price action tested both the lower and upper bound of our intraday model’s pivot trading band, registering session low fractionally below 2881 level and session high just under one point above 2895 level! Click here to verify this claim.
THE DETAILS (The “How & Why”):
Concerns of tightening global supply from the OPEC-led production cuts and U.S.’s sanctions on Iran and Venezuela were further deepened following weekend reports of escalating violence in oil-rich Libya. The U.S. West Texas Intermediate crude (WTI) settled at $64.40 for the first time since November 2018, boosting energy stocks alongside. Energy was the best performing sector, up 0.49% led by Schlumberger Ltd. and Cabot Oil & Gas Corp., both jumping more than 2% each.
Consumer Staples, Technology and Consumer Discretionary were the other notable gainers of the session, closing higher by 0.43%, 0.41% and 0.41%, respectively. Symantec Corp. led the Technology sector higher, soaring 5.44% on stock upgrades by Goldman Sachs. Weakness in semiconductor stocks, however, capped gains within the tech space. Micron Technology Inc. fell 0.97% after an analyst at Cowen & Co. downgraded its stock citing growing competition and eroding cost leadership.
On economic data front, U.S. factory orders in February fell for the fourth time in five months by 0.5% compared to the expected 0.4% decline, indicating slowing economic activity. The 10-year Treasury yield inched slightly higher at 2.53%, benefiting broader Financials sector to close higher by 0.15%.
Utilities and Real Estate were broadly sold-off alongside rising yields to be the biggest drag on the index, closing lower by 0.73% and 0.50%. Meanwhile, Boeing Inc. and General Electric Co. were the worst decliners of the session following stock downgrades, tumbling 5.19% and 4.44%, respectively and weighing down heavily on the Industrials space.
Late Friday announcement by Boeing Inc. of production cuts of its most popular 737 max jets send the aircraft maker’s and its suppliers stocks tumbling at the session open. Southwest Airlines Co also fell 2.46% following stock downgrade by Raymond James, citing concerns that the recent grounding of 737 Max jets could hurt the airliner’s earnings in the upcoming summer season.