Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 01/24” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
Shrugging aside trade concerns and the fear of a global economic slowdown, the S&P 500 index rebounded from last session’s sell-off as investors turned their focus back on corporate earnings. Strong earnings by IBM, Procter and Gamble and United Technologies boosted confidence at the open. Energy stocks, however, weighed down on the index heavily, extended their decline alongside a slide in oil prices.
Whipsawing between gains and losses, the index found support at the key technical level of 50 DMA (now at 2619.49), bouncing off the day’s low at 2612.86. With nine out of the eleven primary sectors trading higher for the day, the index closed the choppy session at 2638.70, up 5.80 points and gaining 0.22% over previous session’s close. Defensive sectors outperformed the broader index to offset some of the weakness in Energy and Materials sectors.
THE DETAILS (The “How & Why”):
Consumer Staples sector led the day’s advances, up a modest 1.17%, led higher by Procter & Gamble Company. The consumer-products giant rose 4.87% on delivering strong quarterly results and raising its fiscal year earnings outlook. Its rival Kimberly-Clark Corp fell 2.72% on reporting weak earnings and profit guidance. Walmart Inc. also helped lift sentiment within the sector, rising 1.25% after Morgan Stanley upgraded the retail giant from equal-weight to overweight, citing its unprecedented commitment to cost control compared to its peers.
Utilities sector also outperformed the index, broadly higher by 1.08%. Technology, Communication Services and Consumer Discretionary were the other notable gainers of the choppy session, up 0.41%, 0.25% and 0.22%, respectively.
IBM Corp led the Tech space higher, soaring 8.46% in its biggest intraday gain in several years on topping earnings estimates and issuing an upbeat guidance for the next year. Capping the sector gains, however, were sharp declines in Take-Two Interactive Software Inc., Qualcomm Inc. and Twitter Inc., by 7.01%, 4.64% and 3.97%, respectively. The chipmaker giant Intel Corp will be reporting its results after-hours on Thursday after market close.
Industrials regained some of the lost ground on the back of strong earnings by United Technologies Corp, up 0.18%. While this industrial conglomerate rose 5.38%, Arconic Inc. also rebounded from its previous session’s slump, rising 5.62% to be the top gainer within the Industrial space.
Oil prices extended their decline amid ongoing concerns of falling global demand. Energy sector was the biggest drag on the index, down 1.00%, led by a 4.70% decline in EQT Corp. Further capping the day’s gains were Materials stocks, closing the session lower by 0.65%.