Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Monday, 08/20” will be posted around 8:30am EDT, Monday.
THE GIST (“THE WHAT”)
Opening the session flat, weakness in the Technology sector led the index lower following disappointing guidance by Nvidia Corp. and Applied Materials Inc. Rebounding on registering the day’s low at 2833.73 in the early session, the index gained an upward momentum as trade optimism kicked in following reports that the U.S. and Chinese negotiators are planning to work on a plan to end the long ongoing trade spat ahead of the November summit.
Impressive quarterly results by Nordstrom Inc. further boosted investors’ sentiment, lifting the index to reach the day’s high at 2855.63. Defensive sectors led the broad-based rally, as the index extended gains for the second straight day. Paring some of the gains in last hour of trading, the index closed off session highs at 2850.13, up 9.44 points and gaining 0.33% over previous session’s close.
Staying resilient in the face of escalating geopolitical tensions, the S&P 500 index again stood its ground as strong corporate performance continued to provide support. The choppy week ended with a decent 0.59% gain as optimism over U.S. – China trade talks overshadowed the concerns of the Emerging markets currency crisis which had weighed down on the index at week’s open. With the second quarterly earnings season approaching its end, investors will closely monitor the developments around trade and Turkish economic crisis in the coming week.
THE DETAILS (The “How & Why”):
Defensive sectors were the notable gainers in today’s broad-based rally, with Real Estate stocks leading the day’s gains, up by 0.96%. Materials, Consumer Staples and Industrials stocks extended their previous session’s gains by 0.74%, 0.67% and 0.61% respectively. Commodities and metal prices edged up for a second straight day on easing of trade war concerns and steadying dollar.
Telecommunications and Utilities sectors were higher by 0.38% each. Lagging behind in today’s broad-based rally were Energy, Financials and Consumer Discretionary, higher slightly by 0.27%, 21% and 0.12% respectively. Nordstrom Inc. was the top gainer in the session, soaring 13.20% on beating second quarter earnings estimates and raising its full year guidance.
Technology sector closed the session slightly higher by 0.18%, reversing early session’s weakness following disappointing guidance reported by Applied Materials Inc. and NVIDIA Corp. The chip equipment makers were the worst performers in the index, falling sharply by 7.72% and 4.90% respectively on reporting a weaker guidance, citing weak customer spending.
With trade and geopolitical concerns still looming in the background, defensive sectors were the top gainers this week. Telecommunications, Consumer Staples and Real Estate sectors outperformed the broader index, with weekly gains of 3.65%, 3.23% and 2.90% respectively. On the other hand, Energy sector was the worst performer with a sharp weekly loss of 3.59% as oil prices registered a third weekly loss on concerns of oversupply and slowing global demand with the intensifying trade and geopolitical tensions.