Note: Our nightly “S&P 500 Outlook,Forecast, and Trading plan for Mon, 07/16” will be posted Sunday, 07/15 evening – please check back later
S&P 500 TODAY – FRI 07/13
THE GIST (“THE WHAT”)
The S&P 500 index opened Friday’s session on a weaker note following mixed earnings results by big banks before the open. Bouncing off on registering the day’s low at 2791.69 in the early morning session, the index gained a bullish momentum as Industrials stocks extended previous session’s rally and Consumer Staples gained lost ground.
On registering the day’s high at 2804.53 (only 0.47 points below the resistance level indicated by our models! click here for the forecast published Thursday night) the index struggled to break through a strong resistance found at the psychologically important 2800 level (also March high at 2801.90). Holding on to the day’s gains, albeit trading in a very tight range thereafter, the index closed the session relatively unchanged at 2801.31, up 3.02 points and gaining a slight 0.11% over previous day’s close.
The index has remained resilient in the face of escalating trade tensions during the mid-week session, ending with a second straight weekly gain of 1.50% as investors remain optimistic ahead of the second round of quarterly earnings season. Supporting investor optimism was strong economic data released this week indicating strength in the economy’s fundamentals.
THE DETAILS (The “How & Why”):
Amid concerns of flattening yield curve, the broader Financials sector gained 1.14% this week. The sector however shed 0.46% in Friday’s session alongside a slight drop in Treasury yields. The much awaited second quarterly earnings results released by big banks like JP Morgan Chase, Citigroup Inc. and Well Fargo & Co before the session’s open were a disappointment, weighing down on the broader sector.
Gaining a modest 0.63%, Consumer staples sector recovered from previous session’s losses to be the best performer in Friday’s session led by a 2.02% gain in Walgreen Boots Alliance Inc. Several retail stocks including Walmart Inc. and Costco Wholesale Corp. were amongst the top gainers of the day.
Industrials sector gained 0.59% in Friday’s session and was the second best performer
this week, with a 2.23% weekly gain as several defense companies got a lift after President Trump suggested that the European countries should increase their spending on defense. While Paccar Inc. led the sector’s advances with 2.79% gain, Deere & Co. was the biggest drag, down 2.29%.
While Technology sector closed with a weekly gain of 2.32%, a second weekly gain in a row, the broader sector closed the Friday’ session relatively unchanged weighed down by a sharp fall of 4.28% in stocks of Netflix Inc. Stocks of Cisco Systems Inc. and Juniper Networks Inc. were also amongst the worst performers in the index, losing 4.13% and 2.28% respectively on news of Amazon.com Inc. competing with traditional network vendors by developing their own low-cost data switch networking systems.
Energy stocks rose 0.56% as oil prices inched up in Friday’s session. The sector ended the week with a decent 0.79% gain; despite oil prices registering a sharp weekly loss on the back of easing global supply concerns after Libya announced its plan to resume export activities at its eastern ports. A monthly OPEC report indicated a 500,000 b/d rise in oil production by Saudi Arabia which further dragged the prices lower this week.
Trade sensitive Materials sector ended with a weekly gain of 0.28% despite plunging mid-week alongside a sharp fall in commodity prices across the board after the Trump administration announced its plan to impose additional 10% tariffs on $200 billion worth of Chinese imports. Trade war concerns eased a bit after China chose to hold of
f its retaliatory moves against the latest round of U.S. tariff plans as it deals with falling stock market and a weakening currency. Consumer Discretionary and Health Care sectors were also strong gainers this week, up 2.10% and 1.60% respectively.
f its retaliatory moves against the latest round of U.S. tariff plans as it deals with falling stock market and a weakening currency. Consumer Discretionary and Health Care sectors were also strong gainers this week, up 2.10% and 1.60% respectively.
Laggards this week were defensive Real estate, Telecommunication, and Utilities sectors, down 0.84%, 1.58% and 1.19% respectively in the broad risk-on mood this week as investors brushed aside trade concerns ahead of the second round of strong earnings season.