Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 11/08” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
The closely watched midterm elections concluded with the Democrats taking control of the U.S. House of Representations and Republicans retaining control of the Senate. While the result was highly expected, a divided Congress could lead to a legislation gridlock. The end of uncertainty, however, lifted morale in today’s session which was further boosted after President Trump hinted at his willingness to work alongside Democrats on policy initiatives.
Gapping significantly higher at the open, the S&P 500 index maintained its climb on a steady momentum to close near session highs at 2813.89, up 58.44 points and gaining a solid 2.12% over previous session’s close. All eleven primary sectors traded higher for the day in today’s post-election relief rally, led by Health Care and Technology as the index broke above the range it had been confined to over the last week and regained the key technical level of 200 DMA (now at 2763.65).
THE DETAILS (The “How & Why”):
Health Care led today’s post-election relief rally. DaVita Inc. was the best performer within the sector, climbing 9.86% after California voters rejected a proposal that could limit the price that dialysis clinics can charge certain patients. Centene Corp. further lifted the sector higher, rising 9.23% on beating earnings estimates. Several Health insurers were also strong performers on reports that three states have approved expanding their Medicaid programs for low-income groups. Humana Inc., Anthem Inc. and UnitedHealth Group Inc. rose sharply by 6.68%, 6.59% and 4.21% respectively.
Technology and Consumer Discretionary sectors extended their rebound with FAANG stocks broadly higher. Semiconductors were strongest performers within the Technology sector led by Adobe Inc. and Advanced Micro Devices, up 5.35% and 5.61%. Salesforce Inc. climbed 5.85% on news that the software company has won patent rights to detect spam emails using the Blockchain technology.
Amazon and Netflix led the Consumer Discretionary sector higher, up 6.86% and 5.36%. On the flip side, Michael Kors Holding Ltd. tumbled 14.62% on missing sales estimates.
Industrials sector closed the session higher by 1.68% with airlines and transportations stocks rising broadly in today’s post-election relief rally. Dollar index extended its slide as midterm election jitters eased, benefiting the Materials sector that gained 1.90% on a sliding dollar.
While oil prices continued their downwards, falling for the sixth straight session, the broader Energy sector closed the session with decent gain of 1.03%. Defensive stocks were the weakest performers with rising risk appetite in today’s relief rally. Utilities, Real Estate and Consumer Staples gained 0.89%, 0.71% and 0.39% respectively.