Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Thursday, 09/06” will be posted around 8:30am EDT, Thursday.
THE GIST (“THE WHAT”)
The S&P 500 index extended its slide as the second round of trade talks between the U.S. and Canada remain in focus. Both the countries resumed their trade talks in an attempt to resolve their differences and renegotiate the NAFTA agreement. Emerging market crisis also hurt the investor confidence. Technology stocks were the biggest drag on the index, falling sharply alongside a congressional testimony of Facebook and Twitter executives regarding their role in 2016 election meddling and data abuse.
Falling at the open amid a tech sell-off, the index rebounded off the day’s low at 2876.92. Swinging within a narrow range and flirting with the upper bound of the level indicated by our models for the continuation of the current bullish consolidation (Click here to read thefull text), the index closed off session lows at 2888.60, down 8.12 points and losing 0.28% over previous day’s close. Eight out of the eleven primary sectors closed the session higher, with defensive sectors offsetting some of the Tech weakness.
THE DETAILS (The “How & Why”):
Technology sector was the weakest performer in today’s session on growing regulatory concerns. FANG stocks were sold-off alongside a congressional testimony of Facebook Inc. COO Sheryl Sandberg and Twitter Inc. CEO Jack Dorsey regarding the social media giants’ roles in Russian meddling in 2016 U.S. elections and their misuse of user data. Twitter Inc. fell sharply by 6.06% leading the broader sector lower by 1.50%. Several other tech stocks, including NetApp Inc., Micron Technology Inc. and IPG Photonics Corp. were among the worst performers of the session.
Netflix Inc. and Amazon.com Inc., Consumer Discretionary stocks that typically mirror the trend in tech stocks plunged 6.17% and 2.19% respectively, dragging the broader sector lower by 1.10%. Several retail and department stores, however, stayed resilient, limiting the sector’s losses. Energy stocks also closed the session slightly lower by 0.08% as oil prices fell to their one-week low.
On the other hand, offsetting some of the day’s losses were strong gains in defensive sectors, Utilities and Consumer Staples, up 1.27% and 1.18% respectively. CenterPoint Energy Inc. rose 3.58% on stock upgrade by JP Morgan, leading the broader Utilities sector higher.
Trade sensitive Materials stocks were modestly higher by 0.61%. Metal prices rebounded from their recent sell-off as the dollar index reversed trend, ending a six session rising streak. Telecommunications, Industrials and Real Estate sectors were the other notable gainers in today’s session, up 0.83%, 0.61% and 0.58% respectively.
Financial stocks closed the session slightly higher by 0.03%. Treasury yields settled relatively unchanged as trade deficit climbed to a five-month high with imports rising to record highs.