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THE GIST (“THE WHAT”)
Hopes of a tentative Brexit deal after three years of bickering boosted the S&P500 index at the open. Positive geopolitical headlines coupled with robust earnings by Netflix Inc. and Morgan Stanley supported the early gains.
Opening solidly higher and above the 3000 level, gains faded as investors digested a mix bag of earnings. Stabilizing in the afternoon session but struggling to hold on the 3000 level, the index closed well off of session highs at 2997.95, up 8.26 points and gaining 0.28% over previous session’s close. Except Technology, all the other ten primary sectors posted modest gains in today’s choppy session.
THE DETAILS (The “How & Why”):
A last-minute Brexit deal which is yet to be approved by the U.K. Parliament but was touted by the U.K. Prime Minister Boris Johnson as a “great deal” helped ease some uncertainty and lift sentiment during the early session. Treasury yields were sharply higher amid optimism of U.K.’s tentative agreement to leave the European Union, but closed off their highs as optimism faded amid uncertainty if the deal could get approved by the U.K. lawmakers.
The highly-awaited result of Netflix Inc. was received with cheer after the video streaming giant beat earnings estimates. Giving up most of the strong early gains, the company closed 2.47% higher as investors digested domestic subscriber growth miss, a key metric that is closely monitored by markets in the wake of growing competition in this space.
Continuing the trend of strong bank earnings, Morgan Stanley jumped 1.52% on posting better-than-expected results in trading and advisory businesses. Union Pacific Corp., United Rentals Inc., Honeywell International Inc. and Dover Corp were some of the major gainers within in Industrials space following upbeat third-quarter results.
Health Care was the best performing sector, up 0.76%, led by a 4.36% jump in Cardinal Health Inc. following reports of talks between the drug distributors to settle $18 billion in litigations brought by state and local governments for fueling opioid epidemic across the nation. Centene Corp., McKesson Corp and AmerisourceBergen Corp. were other drug distributors that gained strongly on the news.
On the other hand, a 5.52% plunge in IBM weighed down heavily on Technology space. The tech giant slipped on missing revenue estimates for the fifth consecutive quarter due to continuing weakness in its global technology services segment.