Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 06/12” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
Taking a breather from an intense 5-day rally, the S&P 500 index reversed its early session’s attempt to extend gains as investors’ focus shifted back to U.S. – China trade tensions ahead of the highly-awaited G20 summit after President Trump threatened to levy tariffs on $300 billion worth of Chinese imports. Opening higher, the index pulled back on registering the session high of 2910.61 to close the lackluster session mostly unchanged at 2885.72, down 1.01 points over previous session’s close.
Sector-wise performance was mixed with Industrials and Utilities offsetting modest gains in Consumer Staples and Consumer Discretionary sectors. Treasury yields also pulled back from their session highs to close relatively flat amid fading gains in equities.
THE DETAILS (The “How & Why”):
Copper and steel prices surged after China announced new fiscal stimulus measures to boost infrastructure spending within its economy, lifting mining stocks in the early session. Albemarle Corporation was the top gainer of the session, gaining 3.52% on reports that it has developed a process that could increase its Chilean lithium output by as much as 30%.
Treasury yields were broadly higher in the early session following the Producer Price Index data (PPI) that suggested an absence of inflationary pressures within the economy. Yields, however, pulled back from their session highs alongside fading gains in equities. The 10-year Treasury yields settled relatively unchanged at 2.14%.
Consumer Staples and Consumer Discretionary were the notable gainers of the session, closing modestly higher by 0.41% and 0.33%, respectively. Dollar Tree Inc. led the Discretionary space, jumping 2.65% following stock upgrade by JPMorgan, citing the discount retailer’s revamping initiatives could boost its future growth.
Offsetting these gains were weakness in Industrials, Utilities and Health sectors, closing lower by 0.90%, 0.69% and 0.25%, respectively. Raytheon Co and United Technologies Corp. weighed down heavily on the Industrials sector, shedding another 5.11% and 3.96% respectively after these conglomerates announced their all-stock merger. Other defense stocks also traded lower for the day. Boeing Inc. further fueled the losses within this space, falling 1.24% amid ongoing investigation of its 737 Max fleet and increasing flight cancellations ahead of the busy summer season.
Technology stocks also gave back some of their recent strong gains on the back of profit-taking. Advanced Micro Devices Inc., Salesforce.com Inc., Intuit Inc. and Qorvo Inc. all fell more than 1% each. Broadcom Inc. surged at the session open following reports that it has entered into a deal with Apple Inc. to supply radio-frequency components, but gains faded ahead of the chipmaker’s earnings release.