Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Friday, 01/25” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
Whipsaw price action continued for the second session in a row as investors weighed trade concerns against a mixed bag of corporate earnings. While semiconductors and airline stocks rallied on the back of strong results delivered by Texas Instruments Inc., American Airlines Group Inc. and Southwest Airlines, Retail stocks fell broadly following disappointing earnings by McCormick & Co Inc.
Gains also remained capped amid trade concerns after the Secretary of Commerce Wilbur Ross said that the U.S. and China are ‘miles and miles’ apart from making a trade deal. Fluctuating between gains and losses, the S&P 500 index closed at 2642.33, up 3.63 points and gaining 0.14% over previous session’s close. Eight out of the eleven primary sectors closed the volatile session higher.
THE DETAILS (The “How & Why”):
Semiconductors were the best performers of the session, rallying on optimism following better-than-expected earnings and lifting the broader Technology sector higher by 0.93%. Xilinx Inc., Lam Research Corp. and Texas Instrument Inc. all soared 18.44%, 15.70% and 6.91% on beating earnings expectations and boosting other chipmakers along.
While Micron Technology Inc., Western Digital Corp. and Analog Devices Inc. fueled the chipmaker rally, rising 6.86%, 6.70% and 6.63%, respectively, Citrix Systems Inc. was the biggest decliner within tech sector, falling 6.26% on disappointing earnings. While Intel Corp also rose 3.80% ahead of its earnings release, the chipmaker tumbled almost 6% in after-hours trading on missing revenue estimates and issuing a weaker-than-expected guidance.
Transportation stocks got a lift from strong earnings. American Airlines Group, Southwest Airlines Co and United Rentals Inc. all soared 6.35%, 6.25% and 6.29% on better-than-expected quarterly earnings, lifting the broader Industrials sector modestly higher by 0.56%.
Consumer Discretionary, Utilities and Real Estate were the other modest gainers of the choppy session, up 0.53%, 0.48% and 0.39%. Auto and auto part makers stocks fell ahead of their earnings results slated to be released next week. Ford Motor Company rose 3.12% despite missing profit estimates amid a softening Chinese and European demand.
Oil prices inched higher on reports that the U.S. has threatened sanctions against Venezuela. The ongoing turmoil in Venezuela also lifted oil prices on concerns of a disruption in supply. Energy sector rebounded from recent losses, closing the session modestly higher by 0.60%.
On the other hand, leading the index lower were Consumer Staples, Health Care and Materials sectors, down 1.30%, 0.86% and 0.56% respectively. Freeport McMoRan Inc. was the worst performer of the session, plunging 13.08% after the copper miner missed fourth quarter earnings estimates.
McCormick & Co was the next biggest decliner of the session, falling sharply by 10.46% on disappointing results. The spice maker also weighed down heavily on other retailers on issuing a dismal outlook for 2019. Within the Health Care space, Merck & Co Inc. and Pfizer Inc. fell 3.01% and 2.87% after a UBS analyst downgraded these drug makers.