Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
For the Outlook, Forecast, and Trading Plans published this morning, please click here
For the Results of the morning’s Trading Plans, please click here.
THE GIST (“THE WHAT”)
The S&P 500 index hit a new record intraday high, crossing 3000 mark for the first time in history after Jerome Powell reinforced the Fed’s easy monetary stance, brushing aside June’s strong jobs report. Chip stocks powered higher and Energy stocks fueled the gains alongside surging oil prices.
Gapping higher, the index hit intraday record highs within few minutes of the open following dovish remarks by Powell in his prepared statement to the U.S. House of Representatives’ Committee. Paring gains, however, on registering day’s high of 3002.98, the index hovered near the record levels and closed off of session highs at 2993.07, up 13.44 points and gaining 0.45% over previous session’s close.
THE DETAILS (The “How & Why”):
While acknowledging that the U.S. economy remains on a strong footing, the Fed Chairman Jerome Powell highlighted the muted inflation and uncertainties around the trade tensions that continues to weigh down on the economic outlook, strengthening the case for an ‘insurance rate cut’ to sustain the current economic expansion.
The index rocketed higher at the open on certainty of a Fed rate cut this month end, crossing above the 3000 mark for the first time in history. Paring gains and hovering around record highs for most part of the latter session, the index closed slightly off the record all-time intraday highs.
Energy sector led the day’s advances, closing solidly higher by 1.40%. Oil prices soared more than 4% to a seven-week high on concerns of supply disruption ahead of the expected storms in Gulf of Mexico. A drop in U.S. crude inventories further boosted oil prices. Noble Energy Inc., Marathon Oil Corp., TechnipFMC PLC and Concho Resources Inc. all gained more than 2% apiece.
Chip stocks extended gains in today’s relief rally to be among the top gainers of the session. Western Digital Corp. and Micron Technology Inc. jumped 4.97% and 3.75%, respectively. All FAANG components traded higher, boosting Communication Services, Technology and Consumer Discretionary sectors by 1.26%, 0.80% and 0.39%, respectively.
In an attempt to expand treatment options for kidney patients in favor of at-home options, President Trump signed an executive order encouraging development of artificial kidneys and providing broader access for kidney transplants. Align Technology Inc., DaVita Inc. and Humana Inc. were the strongest performers within the Health Care space, gaining 4.08%, 4% and 2.99%, respectively.
Meanwhile, Banks and other Financials stocks underperformed to be the biggest drag on the index ahead of the key earnings release by big bank starting next week, closing lower by 0.46%. Treasury yields tumbled at the shorter end of the yield curve during the early session on solidifying expectations of a July rate cut, steepening the yield curve. The 10-year Treasury yield pared losses to settle mostly unchanged at 2.065%.
Industrials and Materials sectors were the other weak performers of the session, down 0.29% and 19%, respectively. Transportation stocks traded broadly lower amid concerns of slowing economy.