Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
For the Outlook, Forecast, and Trading Plans published this morning, please click here
For the last published Results of the Morning Trading Plans, please click here.
THE GIST (“THE WHAT”)
Upbeat batch of earnings and renewed trade optimism sparked a strong bullish rally at the open that bolstered the S&P500 index out of the consolidation range to briefly top the record highs. Stalling thereafter and flirting with the record high levels, the index closed at 3022.55, up 12.26 points and just 0.1% shy of logging a yet another record close. A significantly low trading volume, however, suggested lack of conviction in today’s rally.
THE DETAILS (The “How & Why”):
Optimistic comments by U.S. trade representatives hinting that both the disputing sides are close to finalizing parts of the partial trade deal fueled gains at the session open. A busy day of earnings season saw solid earnings delivered by Intel, Alaska Air Group, Mohawk Industries Inc., Illinois Tool Works Inc. and American Airlines Group Inc., supporting early session’s strong bullish move.
Amazon.com Inc., however, disappointed investors. A surprise decline in profit for the first time in two years and a warning of a weaker holiday period ahead weighed down heavily on its stock. Gapping 5% lower at the open, the e-commerce giant, however, pared losses to close 1.09% lower as investors bought back the stock on long-term prospects.
Technology led the day’s sharp gains, up 1.20%. Chip stocks extended their rally into the second straight session, receiving a boost from Intel Inc.’s better-than-expected third quarter results. A 3.90% jump in NVIDIA Corp following bullish comments by RBC Capital Markets further fueled gains within this space. Advanced Micro Devices Inc. and DXC Technology Co. also climbed more than 3% each. Apple, Alphabet, Facebook, AT&T and Walgreens Boots Alliance are some of the major names set to release their earnings next week.
Materials were the other strong performers of the session, up 1.04%, led by a 5.74% jump in Freeport-McMoRan Inc. alongside a rise in copper prices. Investors gave up safety of bonds amid easing trade tensions, pushing yields higher. The 10-year Treasury yield hit a 5-week high and settled 3.7 basis points higher at 1.805%. The highly-anticipated FOMC meeting next week will be closely monitored by investors.
Rising risk appetite weighed down on defensive stocks. Real Estate sector posted the worst percentage loss of 1.30%. Health-care real-estate investment trust Ventas Inc. was the worst performer of the session, tumbling 8.93% on missing earnings estimates. Edison International was the next worst decliner, sinking 8.51% amid the raging wildfires in California that forced Southern California Edison, a subsidiary of Edison International, to shut off electricity as a preventive measure for nearly 30,000 customers.