Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Monday, 09/24” will be posted around 8:30am EDT, Monday.

THE GIST (“THE WHAT”)

Building on previous session’s gains, the S&P 500 index gapped up at the open, but was unable to hold on to the gains as Technology stocks weighed down on the index. Registering a new intraday high at 2940.91, the index reversed trend to close the session mostly unchanged following a choppy price action at 2929.67, down by only 1.08 points. However, with trade fears ebbing this week, the index charted record new highs once again with a solid 0.85% weekly gain.

THE DETAILS (The “How & Why”):

Financial sector was the weakest performer in today’s session, down 0.37% as Treasury yields took a breather from its recent rally this week, stabilizing ahead of the Federal Reserve’s meeting next week. Moody’s Corp. and E*TRADE Financial Corp. were among the worst decliners of the session, down 2.33% and 2.13% respectively. The sector was, however, a strong performer this week – up 2.26% on a weekly basis on the back of rising yields.
Technology and Consumer Discretionary were the notable decliners in today’s session, down 0.34% and 0.28% respectively ahead of a major shakeup between the sectors after the market close. Reflecting the fact that some of the Technology companies rely mostly on advertising revenue instead of technological advancements, the S&P Global Industry Classification Standard (GICS) renamed the former ‘Telecommunication services’ sector to ‘Communications sector’ which will now include internet and media stocks.
Facebook Inc., Alphabet Inc., Twitter Inc., Walt Disney Co, Netflix Inc., TripAdvisor Inc. and Comcast Corporation will be a part of the new Communications sector. While this move reduces the weighting of Technology sector in the broader index from the current 26% to 20%, it will impact the defensive nature of the former Telecommunications sector by reducing its dividend yield.
Twitter Inc. and Micron Technology Inc. were the biggest drag within the Technology sector, losing 4.52% and 2.87% respectively. While Twitter Inc. fell on reports that it fixed a bug that could have potentially shared private messages of its users to outside developers, Micron Technology Inc. tumbled on disappointing outlook. The country’s largest memory chip producer hinted that its quarterly margins could be negatively impacted if U.S. tariffs on Chinese imports are applied, further weighing down on its stock price.
Materials and Real Estate sectors were the other modest decliners, closing the session lower by 0.23% and 0.13%. Commodities and metal prices were broadly higher this week on the back of a weakening dollar with easing of trade tensions, helping the Materials sector to register a solid 2.30% gain this week.
On the other hand, defensive sectors traded higher for the day. Telecommunications sector was the strongest performer in the session, up 0.98%. Utilities, Consumer Staples and Health Care closed the session higher by 0.39%, 0.26% and 0.19% respectively.
Several airline stocks traded higher for the day, boosting the broader Industrials sector by 0.31%, led by a 4.08% rise in American Airlines Group Inc. after it announced its plan to increase baggage fees. Delta Airlines Inc. and Southwest Airlines Company gained 2.55% and 2.03% on the news.
Energy sector also supported the day’s gains, up 0.72%, reflecting rising oil prices. Oil prices settled higher ahead of a meeting of OPEC and othe
r major oil producers on Sunday to discuss the supply allocation in the face of the Iranian sanctions.