Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 04/04” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
Extending gains for the fifth straight session, the S&P 500 rallied during the early session on reports that the U.S. and China are nearing a trade deal. Gains were however pared in the afternoon session as weaker-than-expected private-sector employment report overshadowed trade optimism.
Strong gains in Materials sector was offset by weakness in Energy stocks that fell alongside a slide in oil prices following a surprise jump in U.S. crude stockpile. Closing at the highest level since October 9, 2018 at 2873.40, up 6.16 points and 0.21% above the previous session’s close, the index is now only 2.35% below September 9, 2018 all-time highs of 2940.91.
THE DETAILS (The “How & Why”):
Reports that U.S. and China are nearing a trade deal boosted global optimism as they resumed their high-level discussion in Washington, setting the stage for a highly-awaited summit between President Trump and Chinese President Xi Jinping to sign the trade agreement as early as this month. Metal and commodity prices rose across the board on trade optimism, lifting the Materials sector by 1.33% to be the best performer of today’s session.
Technology and Consumer Discretionary were the other notable gainers of the session, closing higher by 0.83% and 0.71%. Semiconductor stocks were among the top gainers of the session. Advanced Micro Devices Inc. soared 8.49% following stock upgrades by analysts at Nomura, lifting other semiconductor stocks alongside. Lam Research Corp., Applied Materials Inc. and Micron Technology Inc. rose in-tandem by more than 3% each.
On the other hand, Energy sector was the biggest laggard in today’s choppy session, closing 0.96% lower. Oil prices fell for the first time in four sessions following a surprise jump in U.S. crude stockpiles last week by 7.2 million barrels.
Tobacco stocks traded lower on reports that the FDA (Food and Drug Administration) is investigating close to three dozen cases of teens and young adults that reported seizures after using e-cigarettes. Altria Group Inc. was the biggest decliner of the session, falling 4.78% to lead the Consumer Staples sector lower by 0.63%.
The broader Industrials sector added to the day’s declines, closing 0.27%. Boeing Inc. once again weighed down on this space, falling 1.54% following fresh details on investigations around the deadly plane crash involving its Max 737 jets. Caterpillar Inc. also shed 0.66% on stock downgrades and price target cuts by Deutsche Bank.
Treasury yields edged up on the back of trade optimism, benefiting Financials but hurting interest-sensitive defensive sectors. While Financials added 0.32%, Utilities, Health Care and Real Estate closed lower by 0.15%, 0.12% and 0.11%, respectively.