Note: Our nightly “S&P 500 Outlook,Forecast, and Trading plan for Mon 06/25” – please check back later (usually published around 10:30pm EDT on Sunday).
S&P 500 TODAY
THE GIST (“THE WHAT”)
The S&P 500 index opened the Friday’s session with significant gains fueled by optimism after the OPEC members signed a deal to boost oil production after months of negotiations. Led by a relief rally in Energy stocks, the broader index held on to the day’s gains despite some weakness in Technology sector.
The index however pulled back during the last hour of the session as trade tensions revived, erasing some of the day’s gains and closing near session lows at 2754.88, up 5.18 points and gaining a slight 0.19% over the previous day’s close. Eight out of the eleven primary sectors ended the session higher. The index however suffered a 0.89% weekly loss, a second weekly loss in a row.
The closing action reinforces our models’ negating the weeks long bullish bias and they are now sporting a neutral-to-slightly-cautious bias, albeit not a bearish bias yet. For a view into the models’ current bias and positioning into the weekend, please click here.
The closing action reinforces our models’ negating the weeks long bullish bias and they are now sporting a neutral-to-slightly-cautious bias, albeit not a bearish bias yet. For a view into the models’ current bias and positioning into the weekend, please click here.
THE DETAILS (The “How & Why”):
Oil prices were sent soaring following the news that OPEC members had agreed to increase oil production by 1 million b/d, albeit a smaller-than-expected increase, for taming high oil prices and easing fears of a global supply crunch. The broader Energy sector led the day’s advances, gaining a solid 2.20%, with several energy companies ranking among the top gainers of today’s session. Despite a turbulent week, the sector ended the week gaining 1.52%.
The day’s gains were capped by a 0.38% loss in Technology sector, weighed down by a 14.23% loss in Red Hat Inc. after the software provider reported a weak guidance for the second quarter and fiscal full year. The broader sector was also down 1.31% for the week, despite the FAANG stocks rallying to their all-times highs this week.
Consumer Discretionary erased their early session gains, losing 0.14% as trade tensions revived. President Trump threatened to impose a 20% tax on cars imported from Europe, as a retaliatory move after the European Union followed through with its promise to impose tariffs on American goods valuing to $3.4 billion. The sector was down 0.71% for the week.
Industrials and Materials were the worst performing sectors this week, losing 3.30% and 2.10%, as investors stay cautious with trade tensions lingering in the background. Both these sectors however gained 0.27% and 1.38% in today’s relief rally. The broader Telecommunications sector was also up 1.22% for the day, reversing Thursday’s losses.
As bond yields edged lower this week, Financials stocks shed a further 0.53% in today’s session and were down 1.42% this week. The 10-year yield settled at 2.893%, mostly unchanged at the end of today’s session. Real Estate and Utilities benefitted from falling yields to be the best performing sectors this week, gaining a solid 2.46% and 2.50%.