Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Monday, 05/06” will be posted around 8:30am EDT, Monday.
THE GIST (“THE WHAT”)
The S&P 500 index rebounded from a Fed-led decline as investors cheered a stronger-than-expected U.S. jobs report for the month of April. A slew of robust earnings further fueled the day’s gains. Rising broadly, the index closed just a whisker below record intra-day highs registered on Wednesday at 2945.64, up a solid 28.12 points and gaining 0.96% over previous session’s close. All of the eleven primary sectors closed solidly higher in today’s broad-based rally.
THE DETAILS (The “How & Why”):
The U.S. jobs report for the month of April indicated that payrolls increased by 263,000, beating the expected reading of 178,000. While the unemployment rate fell to 3.6%, its lowest level since December 1969, the average hourly earnings rose at a less-than-expected rate of 0.2%, suggesting a lack of inflation pressure and sparking a broad-based rally in equities.
Treasury yields, however, fell following a weaker-than-expected ISM’s non-manufacturing index that came in at 55.5%, compared to the expected reading of 57.5%.
Consumer Discretionary, Industrials and Communication Discretionary were the best performing sectors in today’s broad-based rally, closing sharply higher by 1.40%, 1.24% and 1.16%, respectively. Newell Brands Inc. was the top gainer of the session, soaring 13.52% despite reporting a decline in sales as investors focused on management’s optimistic turnaround strategy.
Flowserve Corp., Monster Beverage Corp. and Dentsply Sirona Inc. were the other strong performers on the back of strong quarterly earnings. A 3.24% jump in Amazon Inc. boosted the Consumer Discretionary space after reports that Warren Buffett’s Berkshire Hathaway is buying the e-commerce giant’s shares.
Oil prices also bounced back from their one-month lows, albeit logging a second weekly decline as investors weigh continued strength in demand against the ongoing supply glut from surging domestic crude supply. Energy stocks gained some of their lost ground, closing modestly higher by 0.84%.
On the other hand, limiting the day’s gain was a sharp 11.05% decline in Cognizant Technology Solutions Corp following a slew of stock downgrades after the professional services company posted a disappointing forecast, citing slowdown in banking and health-care segments.
Arista Networks Inc. and Fortinet Inc. were among the other major decliners, down 10.44% and 6.06%, respectively on missing earnings estimates. Weaker-than-expected earnings reported by Skyworks Solutions Inc. dragged its stocks lower by 3.51%. Qorvo Inc. also shed 2.05% ahead of its earnings release next week.