Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Monday, 09/10” will be posted around 8:30am EDT, Monday.

THE GIST (“THE WHAT”)

Technology sector sell-off led the S&P 500 index lower this week, pulling back from record highs and registering a four day losing streak. Investor confidence remained capped this week with escalating U.S. – China trade tensions and with no apparent resolution out of the U.S. – Canada trade talks. Inflation fears, following a surprise increase in wage growth boosted Treasury yields in today’s session, sending defensive sectors lower.
Opening today’s session lower, the index rebounded on optimistic August jobs report, registering the day’s high at 2883.81. It however, took a sharp leg lower as trade jitters kicked in during the afternoon session after President Trump threatened a new round of tariffs on an additional $267 billion worth of Chinese goods.
Bouncing off the day’s low of 2864.12 ( less than one point below the level indicated by our intraday models to go short. Click here to read the full text), the index closed off session lows at 2871.68, losing 0.22% over previous day’s close and down 1.03% for the week. 10 out of the 11 primary sectors ended the session lower in today’s broad-based sell-off.

THE DETAILS (The “How & Why”):

While the August jobs report came in slightly higher than expected at 201,000, a relatively unchanged unemployment rate and a surprise rise in wage growth stoked inflation fears. Treasury yields rose sharply higher on concerns of a further monetary tightening by the Federal Reserve. The 10-year yield rose to a one-month high at 2.94%, inching closer to the psychologically important 3% mark once again. Investors will be keenly looking to the CPI Inflation data and PPI data next week for clues on the inflation trajectory.
Interest-rate-sensitive and dividend paying stocks were the worst performers on the back of rising yields. Real Estate and Utilities led the day’s declines, down 1.24% and 1.20% respectively. T. Rowe Price Group Inc. led the broader Financials sector lower, tumbling 4.88% on reports of closing its Emerging Markets stock funds for new investors.  
Industrials and Materials were also modestly lower by 0.54% and 0.31% on the back of intensifying trade tensions. On top of the tariffs on $200 billion worth of Chinese goods that go into effect soon, President Trump threatened China with a new round of levies on $267 billion of Chinese go
ods. Dollar strengthened following an unexpected wage growth for the month of August, weighing down further on metal prices.   
Technology stocks extended its slide, down 0.34%. The sector shed 2.81% this week as the FANG stocks faced investors’ brunt on concerns that the growing regulatory environment could hurt profitability of the industry following a congressional testimony of Facebook and Twitter executives.
Chip stocks further dragged the Technology sector lower in Thursday’s session after Morgan Stanley highlighted worsening industry fundamentals with rising cost pressures and growing inventories. Adding to these concerns, Apple and Intel issued warnings that the proposed tariffs by the Trump administration could impact their business negatively. However, Broadcom Inc. was the top gainer in the index, up 7.69% on beating the third quarter earnings estimates.
Energy sector was the worst under-performer this week, down sharply by 3.03% on a weekly basis. Oil prices continue to remain under pressure. Worries of falling global demand amid ongoing trade tensions and economic crisis in the emerging market overshadowed the effect of tightening crude oil supplies. On the other hand, retail and specialty chains were strong performers this week, lifting the broader Consumer Staples sector by 1.00% on a weekly basis.