Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Friday, 11/02” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
Opening the month on a positive note, the S&P 500 index extended its rebound for the third straight session. An early morning tweet from President Trump hinted at a progress in trade talks with China. Easing trade tensions, weakened dollar and a better-than-expected quarterly results by DowDuPont Inc. sparked a rally within the broader Materials sector to lead the index higher. A strong jobless claims data further boosted sentiment at the open.
Opening higher, the index gave up most of the early session gains but soon gained a bullish momentum. Climbing higher with a steady momentum, the index closed near session highs at 2740.37, up 28.63 points and gaining 1.06% over previous session’s close. Ten out of the eleven primary sectors closed the session higher.
THE DETAILS (The “How & Why”):
Leading the index higher were Materials stocks, up 3.01%, gaining solidly on the back of a falling dollar index and easing of trade tensions. DowDuPont Inc. was the best performer in the sector, climbing 8.07% on reporting strong third quarterly results. The world’s largest chemical maker fueled the rally within the broader sector on indicating growing demand from automotive and manufacturing customers. Trade-sensitive Industrials stocks also extended their gains by 1.72% following a bunch of strong quarterly results from industrial behemoths.
Retailers, homebuilders, auto and auto parts makers gained broadly to lift Consumer Discretionary by 2.23%. Wynn Resorts Inc. led the sector higher, soaring 11.96% after casino stocks received a ‘buy’ rating from an analyst at Jefferies, citing undervaluation. HanesBrands Inc., however, limited sector gains, falling 5.54% on missing sales estimates.
Semiconductor stocks were the best performers within the Technology sector, rebounding from last month’s steep losses and lifting the sector by 1.20%. Advanced Micro Devices Inc., Applied Materials Inc. and Lam Research Corporation rose sharply by 11.04%, 7.51% and 7.15% respectively.
Trading within the FAANG stock was mixed. While Apple Inc. rose modestly by 1.54% ahead of its closely watched full-year earnings results, the largest company by market valuation tumbled 7% in after-hours trading on disappointing guidance. Amazon.com Inc. and Netflix Inc. gained 4.23% and 5.17% respectively.
Newfield Exploration Company soared 16.14% on reports that Calgary-based Encana Corp. plans to buy the oil and gas company in a stock swap valued at $5.5 billion. The broader Energy sector closed the session with a modest gain of 0.83%, despite oil prices falling to their lowest levels since April on surging U.S. oil production.
Health Care, Real Estate and Financials were the other gainers, up 1.31%, 0.46% and 0.45% respectively. Utilities was the only sector extending previous session’s losses by 0.53%. On the economic data front, the initial weekly jobless claims fell to 214,000, its lowest levels since 1973.