Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Monday, 11/05” will be posted around 8:30am EDT, Monday.
THE GIST (“THE WHAT”)
Buoyed by a better-than-expected jobs report, the S&P 500 index opened higher. Hopes of an imminent trade agreement with China further boosted optimism in the early session, but the index soon took a bearish reversal after White House economic advisor Larry Kudlow contradicted the earlier reports.
Disappointing results by Apple Inc. and rising Treasury yields further weighed down on the broader index, ending its three-day winning streak. Late afternoon comments by President Trump, however, helped trim some of the day’s losses after he hinted at a progress towards a fair U.S. – China trade deal.
The index reversed early session gains on registering the day’s high at 2756.55. Bouncing off of the support level of 2700, the index closed the choppy session off of session lows at 2723.06, down 17.31 points and losing 0.63% over previous day’s close. Solid earnings by Newell Brands Inc. and Starbucks Corporation lifted retail and departmental chain stocks, offsetting some of the technology weakness. The week, however, closed with a modest 2.42% gain, erasing some of the last month’s steep losses.
THE DETAILS (The “How & Why”):
Apple Inc. sparked a sell-off within the Technology sector, tumbling 6.63% after the world’s largest tech company’s fourth quarter fiscal earnings report disappointed investors on weaker-than-expected holiday season guidance. Suppliers of the iPhones maker also fell sharply in-tandem.
Qorvo Inc., Skyworks Solutions Inc. and Broadcom Corp fell sharply by 5.72%, 4.72% and 3.96% respectively. On the bright side, VeriSign Inc. soared 17.20% following a stock upgrade by J.P. Morgan, citing optimistic outlook after the domain-names and internet-security company announced that it has reached an agreement with ICANN to raise prices for the ‘dot-com’ names.
Treasury yields edged higher after a solid jobs report caused a sell-off in long-term treasury bonds. The economy added 250,000 jobs compared to the expected 208,000, pushing the wages higher by 3.1%, at the fastest pace in nine years. Yields rose on fears that rising wage rates could increase inflation, thus encouraging Federal Reserve to keep raising interest rates. Defensive sectors traded lower alongside rising yields. Real Estate, Utilities, Health Care and Consumer Staples shed 0.93%, 0.66%, 0.51% and 0.27% respectively.
Oil prices registered a fourth straight weekly
decline, falling in today’s session on concerns of oversupply after the Trump administration announced that it will spare eight countries from Iranian sanctions. While the broader Energy sector was sold-off alongside a fall in oil prices, Chevron Corporation and Exxon Mobil Corporation helped limit the losses, rising 3.20% and 1.59% on reporting their highest third quarterly profits in four years. The sector closed the session slightly lower by 0.11%.
decline, falling in today’s session on concerns of oversupply after the Trump administration announced that it will spare eight countries from Iranian sanctions. While the broader Energy sector was sold-off alongside a fall in oil prices, Chevron Corporation and Exxon Mobil Corporation helped limit the losses, rising 3.20% and 1.59% on reporting their highest third quarterly profits in four years. The sector closed the session slightly lower by 0.11%.
On the other hand, Consumer Discretionary was the only outperformer in today’s broad-based sell-off session, up 0.41%. Newell Brands Inc. and Starbucks Corporation soared 14.74% and 9.70% on strong quarterly earnings, boosting other retail and department chain stocks. Ulta Beauty Inc. and Macy’s Inc. were the other strong performers within the sector, up 3.30% and 2.75% respectively.