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THE GIST (“THE WHAT”)
Building on Wednesday’s afternoon relief rally, the S&P 500 surged higher after stronger-than-expected economic data out of China eased global recession jitters and helped erase most part of early week’s sharp losses. The closely-watched reference rate of Chinese yuan to U.S. dollar was set at a slightly higher-than-expected rate of 7.0205 per dollar, further boosting sentiment.
Opening higher, the index gained a solid momentum with all eleven primary sectors trading sharply higher. Energy stocks surged alongside a jump in oil prices, leading the index higher to close near session highs at 2938.09, up 54.11 points and gaining 1.88% over previous session’s close. Technology and Communications Services were the other major gainers of today’s broad-based relief rally.
THE DETAILS (The “How & Why”):
Treasury yields stabilized from their steepest decline that took them to their multi-year lows after China reported a 3.3% y-o-y jump in its exports. A stabilizing yuan and stronger-than-expected economic data out of China helped calm recession fears that had sparked a flight towards safety on Wednesday. The 10-year Treasury yield edged slightly higher to settle at 1.72% after falling below 1.6% after several central banks cut their benchmark interest rates.
Oil prices bounced back from their recent lows, climbing more than 3% on strengthening expectations of production cuts by the OPEC in an attempt to curb plunging oil prices. Easing of recession fears further helped boost oil prices. Energy stocks were the best performers of the session, closing higher by 2.89%. Concho Resources Inc., Marathon Oil Corp and Hess Corp were the strongest gainers within this space, gaining lost ground and jumping 7.96%, 6.72% and 4.02%, respectively.
Technology and Communication Services sectors were the other major gainers, up solidly by 2.39% and 2.22%. Advanced Micro Devices Inc. was the top gainer of the session, skyrocketing 16.20% after the chipmaker released the newest generation of its processor chip for data centers while announcing Alphabet Inc. and Twitter Inc. as its new customers.
Symantec Corp was the other strong gainer in the technology space, jumping 12.30% on reports of a nearing acquisition deal with Broadcom Inc. All of the FAANG components posted more than 2% intraday gain in today’s broad-based rally. Consumer Discretionary, Materials, Industrials, Financials and Real Estate all closed higher by more than 1% each.
On the flip side, Kraft Heinz Co. plummeted 8.58% after the food company posted disappointing results for the first half of 2019. Centurylink Inc. and Perrigo Co. were the other major decliners of the session, falling 7.60% and 6.80% on missing earnings estimates.