Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Mon, 07/30” will be posted Sun, 07/29 night – please check back around 10:30pm/11pm EDT.
THE GIST (“THE WHAT”)
Technology stocks extended their slide, weighing down on the S&P 500 index for the second straight day, overshadowing optimism following strong GDP data. Twitter released disappointing earnings further hurting investor confidence following the Facebook fiasco that whipped out the social-media giant’s value by $120 billion, to be the largest one day decline in value of any publicly listed company in the history of the U.S. stock market. Further weighing down on the index were earnings misses reported by companies across sectors.
Falling sharply but finding support at 2810 (day’s low registered at 2808.34, less than 2 points away from the level indicated by our models to negate the current strength in the bullishness. Click here for the full report) the index closed near session lows at 2818.82 (again, little more than one point shy from the bullish consolidation range indicated by our models), down 18.62 points and losing 0.66% over previous day’s close.
The busiest week of the earnings season however ended with a modest gain of 0.61%. This is a fourth straight weekly gain as investors overlooked the trade and geopolitical tensions in favor of strong corporate earnings across the board.
THE DETAILS (The “How & Why”):
While the highly anticipated GDP (Gross Domestic Product) growth rate for the second quarter indicated a robust economy, the figures came in below lofty expectations at 4.1% compared to the expected 4.2%, hence failing to boost investor confidence amid Facebook Inc.’s induced sell-off. Further aggravating losses within the Technology sector was a sharp 20.54% in Twitter Inc. after the social-media company reported a decline in its user numbers. Intel Corp also tumbled 8.59% on concerns of weakening data center segment business.
The broader Technology sector was down 1.99% to be the worst performing sector in today’s session, and down 1.15% for the week. On the bright side, Amazon Inc. reached record highs at the open after the e-Commerce giant posted its biggest quarterly profit in its history. Stocks of the company however pared gains during the session to close only 0.50% higher.
Real Estate, Health Care and Energy were the other notable sectors ending the session lower by 0.93%, 0.71% and 0.51% respectively. Utilities, Materials and Consumer Discretionary sectors shed 0.41%, 0.36% and 0.27% respectively. While Energy sector was the best performer this week, up 2.31%, the sector shed previous session’s gains alongside a fall in oil prices in today’s session. Edwards Lifesciences Corp., EQT Corp. and Western Digital Corp. were among the biggest decliners in the index, down 8.51%, 8.26% and 7.73% respectively on disappointing earnings.
On the other hand, Telecommunications, Financials and Consumer Staples were the only sectors closing the session higher by 1.94%, 0.25% and 0.16% respectively. National Oilwell Varco Inc., Expedia Group Inc. and Goodyear Tire & Rubber Co. were the top gainers in the index, up 10.32%, 9.53% and 9.46% respectively on beating estimates.