Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Monday, 03/18” will be posted around 8:30am EDT, Monday.
THE GIST (“THE WHAT”)
Resuming its rally after a brief pause in the previous session, the S&P 500 logged a best weekly gain since November 30, 2018 and closed convincingly above the key resistance level of 2800. Brushing aside geopolitical and economic concerns, the index rallied on the back of surging semiconductor stocks.
Opening higher on signs of progress in U.S. – China trade talks following optimistic comments by Chinese Premier Li Keqiang, the index gained a solid upward momentum alongside rallying technology stocks. Eight out of the eleven primary sectors were led higher by Technology sector, the day’s gains being capped by weakness in Real Estate and Industrials sectors.
Registering fresh 2019 highs, the index closed at 2822.48, up 14 points and gaining 0.50% over previous session’s close. The quadruple witching, the quarterly expiration of index options and futures, and stock options and futures was likely to have contributed to the volume increase this week.
THE DETAILS (The “How & Why”):
Signs of progress around U.S. – China trade talks, coupled with hopes that the Chinese economy could get a boost from strong stimulus measures helped lift investor sentiment at the open. Meanwhile, U.S. Treasury yields fell to their lowest level since January following a mixed bag of economic data. While new job openings rose to the third highest level on record to 7.58 million in January, industrial production rose at a below-than-expected rate of 0.4% in February.
A strong rally in semiconductor stocks, however, outweighed the concerns of a cooling domestic economy. Broadcom Inc. sparked a rally in chipmaker stocks by soaring 8.24% on beating earnings estimates. While the semiconductor supplier reported a decline in revenue, it maintained its full-year guidance suggesting an upbeat outlook for the industry.
Applied Materials Inc., Texas Instruments Inc. and Lam Research Corp were among the top gainers of the session, all jumping more than 3% each on optimistic outlook. Apple Inc. also rose 1.30%, logging a six-day winning streak and fueling gains within the Technology space.
Facebook Inc. extended declines, shedding another 2.46% following an abrupt exit of two high profile executives. The social-media giant was heavily criticized on reports that the terrorist attack in New Zealand that killed 49 people was live-streamed on Facebook by the shooter. Communication Services sector was weighed down heavily by Facebook Inc. to close relatively unchanged, outweighing gains in Activision Blizzard Inc., AT&T Inc. and Take-Two Interactive Software Inc.
Consumer Discretionary and Financials were the other strong performers in today’s rally, up 0.71% and 0.64% respectively. Ulta Beauty Inc. was the top gainer of the session, soaring 8.29% on posting better-than-expected revenue and earnings. Amazon.com Inc. also rose 1.55% after investment banker KeyBanc upgraded the online-retail giant and increased its price target by 23%, citing improving profitability of its core online retail business.
On the other hand, the only two sectors not participating in the day’s gains were Real Estate and Industrials, closing lower by 0.38% and 0.25%. Boeing Inc. recouped some of its recent sharp declines on hopes of a faster-than-expected software fix for its 737 Max jet fleet that were grounded by several countries following two deadly crashes in five months. General Electric Co. also weighed down on the Industrials space, falling 3.30% after the struggling conglomerate provided a dismal guidance for the year.