Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Monday, 11/26” will be posted around 8:30am EDT, Monday.
THE GIST (“THE WHAT”)
Oil prices deepened into their bear market territory, falling more than 7%, weighing down heavily on Energy stocks and dragging the S&P 500 index once again into a correction territory. Technology stocks extended their slide to further accelerate losses in the holiday-shortened trading session.
Opening significantly lower, the index reversed trend mid-session as defensive stocks gained momentum. Taking a sharp leg lower during the last few minutes of trading, the index closed the choppy session near day’s lows at 2632.56, down 17.37 points and losing 0.66% over previous session’s close. The index registered a sharp weekly loss of 3.58% primarily led by Technology and Energy weakness.
THE DETAILS (The “How & Why”):
Oil prices plunged to their lowest level in a year, registering their seventh straight weekly decline on concerns of surging global supply coupled with falling demand due to global economic slowdown. Friday’s steep decline came ahead of the keenly awaited meeting between the OPEC and its allies on December 6 in Vienna. While Saudi Arabia and other OPEC members have hinted at their willingness to support a production cut, ongoing pressure from the Trump administration to maintain low prices continue to weigh down on oil prices.
Energy was the worst performing sector of the session, down 3.26%. Oil exploration and production, drilling, oilfield services were the worst decliners of the session led by Concho Resources Inc., Devon Energy Corp. and EOG Resources Inc., down 6.31%, 5.68% and 5.00%, respectively. EQT Corporation, a petroleum and natural gas exploration and pipeline transport company was the only company within the sector to close the session with a decent 1.80% gain on the back of strengthening natural gas prices.
FANG weakness once again weighed down on the broader index. Communication Services, Technology and Consumer Discretionary sectors were all lower by 1.20%, 0.87% and 0.44%. Facebook Inc. extended its slide, falling 2.29% amid ongoing stream of negative reports around the social-media giant’s efficiency in handling the Russian meddling in 2016 U.S. elections.
Apple Inc. also shed another 2.54%, giving up its title of being the world’s biggest company by market cap amid ongoing concerns of falling iPhone demand. Netflix Inc. and Alphabet Inc. fell 1.26% and 1.28% respectively. While Amazon.com Inc. rallied at the open as the holiday shopping season kicked off, it gave up gains by the end of the session, closing lower by 0.97% following news that thousands of European Amazon workers are staging protect against the ‘inhuman’ working conditions in the online retail giant’s warehouses.
Treasury yields edged lower as investors continue to prefer safe haven bonds amid ongoing global equity market weakness, hurting Financials stocks by 0.91%. Materials, Real Estate and Industrials were the other weak performers of the session, down 1.10%, 0.34% and 0.21% respectively.
On the bright side, Consumer Staples, Health Care and Utilities outperformed the broader index to limit the day’s losses as investors piled up on defensive sectors. Food and beverage and other consumer staples were broadly higher as the holiday shopping season kicked off. Airline stocks were also strong gainers of the session, benefiting from cheap oil prices. American Airlines Group Inc., Delta Air Lines Inc. and Southwest Airlines Company gained 4.52%, 2.13% and 0.82% respectively.