Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
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For the last published Results of the Morning Trading Plans, please click here.
THE GIST (“THE WHAT”)
Building on previous session’s momentum, the S&P 500 index closed solidly above the trading range it was strictly confined to during the brutally volatile month of August and convincingly above the 50 DMA (now at 2946.48) for the second session in a row. As investors digested the weaker-than-expected jobs report for the month of August, solidifying expectations of a Fed rate cut coupled with the expectations of de-escalation of U.S. – China trade tensions helped the index to log a second weekly gain.
Falling sharply at the open following a disappointing jobs report, the index pared losses amid cautious optimism going into the weekend. Whipsawing within a narrow range for most part of the afternoon session, the index closed off of session highs at 2978.71, up only 2.71 points above previous session’s close and 1.6% away from the all-time record close of July 26, 2019. Sector-wise performance was mixed with Energy posting the best gains of the choppy session.
THE DETAILS (The “How & Why”):
Friday’s jobs report suggested that the private payrolls in the month of August grew at the weakest pace since May, flashing confirming signs of a slowing economy. The U.S. economy added 130,000 jobs in August compared to the expected figure of 170,000 and down from 164,000 jobs added last month. On the bright side, unemployment rate remains near the lowest level in over 50 years at 3.7%, while the wage growth grew 3.2%.
Investors bought into the safe-haven bonds on growing concerns of economic slowdown, pushing yields lower again. The 10-year Treasury yield settled lower at 1.552%, although logging its biggest weekly gain in nearly 2-months. The closely-watched yield curve remained un-inverted with the 2-year Treasury yield settling at 1.528%. The S&P 500 index managed to held on to slight gains amid trade optimism and solidifying expectations of a September Fed rate cut.
Symantec Corp was the top gainer of the session, jumping 4.47% after private-equity firms Permira and Advent International announced their interest in buying the cybersecurity firm for $16 billion. Perrigo Co. lifted the generic pharmaceutical space, climbing 3.65% on announcing its plan to acquire GlaxoSmithKline’s heartburn treatment, Prevacid 24-hour which will give Perrigo exclusive rights to sell the drug in the U.S.
Oil prices edged higher following reports of a third weekly decline in U.S. oil-drilling rigs. Energy sector was the best performer of the session, up 0.52%. HollyFrontier Corp and Helmerich & Payne Inc. gained more than 2% apiece. Materials, Consumer Staples and Health Care posted modest gains of 0.48%, 0.47% and 0.31%, respectively.
Meanwhile, reports that the attorneys general of eight states and the District of Columbia will launch their investigation into Facebook Inc.’s anti-trust violations to probe into the social-media giant’s role in endangering consumer data, increasing advertising prices and reducing the quality of consumers’ choices send Facebook Inc. tumbling by 1.79%. All the other FAANG components traded lower on growing regulatory concerns. Weakness in Utilities, Communication Services and Technology sectors kept the day’s gains capped.