Note: Our nightly “S&P 500 Outlook,Forecast, and Trading plan for Wed, 07/04” – please check back later.
S&P 500 TODAY – TUE 07/03
THE GIST (“THE WHAT”)
The S&P 500 index extended Monday’s optimism as Energy stocks bounced back from Monday’s sell-off during the opening session on news of a decline in U.S. crude stockpiles. Trading within a tight range on a tepid volume, while holding on to slight gains, the index reversed trend falling sharply in the last hour of the session on a short trading day ahead of July 4th holiday.
Unable to hold on to the support level of 50 DMA (now at 2719.46), the index closed near session lows at 2713.22, down 13.22 points and losing 0.49% over previous day’s close, as a sell-off in Technology stocks overshadowed gains in Energy and Telecommunication sectors. The index has been confined within the 2700 – 2745 trading range for 7th day in a row.
THE DETAILS (The “How & Why”):
Energy stocks rallied in the open taking the broader index higher. Oil prices rose ahead of an EIA data release on the expectations of a decline in U.S. crude stockpiles. Supply concerns due to output disruptions in Libya and Venezuela further fueled the price increase. The sector however reversed some of the early gains, ending higher 0.72% as oil prices pulled back later in the session.
Technology was the worst performing sector, losing 1.37%, led by a 5.51% decline in stocks of Micron Technology Inc. after its rival Taiwanese rival United Microelectronic Corporation claimed that the company has been temporarily banned from selling Micron chips in China following a violation of a patents rights. Lam Research Corp. was the second biggest loser in the index, down 3.35% after reporting a disappointing outlook for the fiscal year.
Financials stocks also added to the day’s decline, losing 1.05% as yields fell across the board on a risk-off trading mood in Tuesday’s session as investors remain cautions with the nearing of tariff impositions. The 10-year Treasury yield settled 3.8 basis points lower at 2.83%. Extending Monday’s losses, Materials stocks shed a further 0.33%. Consumer Discretionary and Industrials sectors were also down 0.60% and 0.37%, respectively.
Limiting day’s losses were strong gains in Telecommunication sector. The broader index got a 1.17% lift from a 3.08% rise in stocks of CenturyLink Inc. Meanwhile, the broader Utilities sector closed 0.25% higher led by 4.05% rise in stocks of Scana Corp which was the best performing stock in the index. Real Estate, Health Care and Consumer Staples were also up 0.48%, 0.21% and 0.19% respectively.