Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Monday, 12/3” will be posted around 8:30am EDT, Monday.
THE GIST (“THE WHAT”)
Fueled by Federal Reserve Chairman Jerome Powell’s dovish comments and optimism ahead of the critical meeting between President Trump and his Chinese counterpart Xi Jinping, the S&P 500 logged its best week in seven years with a solid weekly gain of 4.85%. Leaders of all three North American nations formally signed a new U.S.- Mexico – Canada trade agreement to replace NAFTA, further lifting sentiment.
Trading with cautious optimism as the closely watched G-20 Summit got underway in Argentina; the index gained a strong upward momentum as positive comments by U.S. trade officials helped lift confidence about a possible breakthrough in the U.S. – China trade negotiations. With ten out of the eleven primary sectors supporting gains, the index closed near session highs at 2760.17, up 22.41 points and with a modest 0.82% gain over previous session’s close, albeit still under 2 points shy from retaking the technically important 200 DMA (now at 2761.88).
THE DETAILS (The “How & Why”):
Easing of rate hike fears and hopes of a possible breakthrough in U.S. – China trade negotiations pushed yields lower across the board. The 10-year Treasury yield registered a largest monthly drop in a year, settling at its lowest level since September 2018 at 3.015%. Falling yields helped boost defensive sectors with Utilities leading the index higher with a strong 1.54% gain. Health Care, Real Estate and Consumer Staples sectors all traded higher by 1.08%, 1.00% and 0.85%, respectively.
Technology sector erased previous session’s losses in today’s broad-based rally, up 1.06%. Semiconductors were broadly higher on trade optimism. NVIDIA Corp., Intel Corp and Analog Devices Inc. rose 3.86%, 3.38% and 2.68%, respectively. Consumer Discretionary and Communication Services were among the other notable gainers, modestly higher by 0.69% and 0.44%.
Energy sector was the only drag on the broader index, down 0.24% alongside a worst monthly drop in oil prices amid doubts about Russia’s commitment to cut production to curtail the global supply glut. U.S. crude oil prices briefly dropped below the psychologically important $50/b level, albeit parring declines in the later session to settle at $50.93/b.
Low oil prices, however, benefited transportation and airline stocks to lift the broader Industrials sector by 1.04%. American Airlines Group Inc., Delta Air Lines Inc. and Deere & Company rose 4.53%, 3.14% and 3.27%, respectively. While the Materials sector added to the day’s gains, up 0.43%, it lagged the broader index, weighed down by a rise in U.S. dollar index on the back of dovish comments by Jerome Powell.