Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 03/12” will be posted around 8:30am EDT, Tuesday.
THE GIST (“THE WHAT”)
Rebounding from a five day losing streak, a strong Tech-led rally lifted the S&P 500 index to regain the key technical support of 200 DMA (now at 2751.15) once again after closing below it last week on fears of an economic slowdown. While retail stocks gained from a stronger-than-expected retail sales data, oil prices rose on the back of output cuts by OPEC, further boosting day’s gains.
Rallying higher during the early session, the index maintained gains throughout the session with all of its eleven primary sectors participating in gains. Apple Inc. and Facebook Inc. sparked a strong rally in Technology and Communication Services sectors following stock upgrades, helping offset an early session slump in Boeing Inc. The index closed its best day in five weeks near session highs at 2783.30, up 40.23 points and gaining 1.47% over previous day’s close.
THE DETAILS (The “How & Why”):
NVIDIA Corp was the best performer of the session, surging 6.97% after announcing its largest acquisition to date valuing $6.9 billion for a high-performance-computing equipment maker Mellanox Technologies Ltd., outbidding Intel Inc. and Microsoft Corp. Other semiconductors also rose in tandem. Align Technology Inc., Seagate Technology PLC, Western Digital Corp and Advanced Micro Devices Inc. all gained more than 4% each.
Technology and Communication Services were the best performing sectors, up 2.17% and 1.86% with all of their components trading higher for the day. Apple Inc. soared 3.46% after Bank of American Merrill Lynch upgraded the tech giant, citing that the recent sharp pullback in its stock created a buying opportunity. Meanwhile, Facebook Inc. also jumped 1.46% on stock upgrade by Nomura Instinet, fueling gains within the technology space. All the other FAANG stocks gained more than 2% each.
Energy sector traded higher alongside rising oil prices that settled higher for the day on reports that Saudi Arabia plans to cut its oil exports to less than $7 billion b/d. Consumer Discretionary and Consumer Staples benefited 1.53% and 1.33%, respectively after a better-than-expected January retail sales data helped ease some of the recession jitters, especially after a tepid December retail sales reading.
Materials, Real Estate and Health Care were the other strong performers of today’s broad-based rally, benefiting from a lower dollar and a pullback in Treasury yields following a better-than-expected retail sales reading.
Offsetting gains was a sharp 13.5% plunge in Boeing Co. in the early session following Sunday news of a deadly crash of a Boeing 737 Max 8 aircraft in Ethiopia that killed all of its 157 passengers aboard, a second deadly crash in just five months. The aerospace giant, however, pared some of its losses to close lower by 5.33%.