Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 03/19” will be posted around 8:30am EDT, Tuesday.
THE GIST (“THE WHAT”)
Building up on last week’s solid gains, the S&P 500 index rallied on the back of a jump in energy, banking and retail stocks to close at a five-month high. Gains, however, remained capped alongside a slide in Facebook Inc. following stock downgrade in the wake of several negative reports around the social-media giant.
Ending the session near session highs at 2832.94, up 10.46 points over previous session’s close, the index is now 3.8% away from its September record highs. Seven out of the eleven primary sectors traded higher for the day, with Communication Services sector offsetting some of the strength in Energy, Financials and Consumer Discretionary sectors.
THE DETAILS (The “How & Why”):
Energy was the best performing sector in today’s choppy session, closing higher by 1.39%. Oil prices hit a four-month high on hints that the OPEC might further extend its supply curbs till mid-2019. Reports of a decline in crude inventories in Cushing, Oklahoma also helped boost oil prices further. National-Oilwell Varco Inc., Concho Resources Inc. and EOG Resources Inc. were among the top gainers of the session, rising 6.19%, 3.55% and 3.46%, respectively.
Consumer Discretionary and Financials sectors also outperformed the broader index, closing a little over 1% each. Retail stocks were led higher by a 4.35% jump in Advanced Auto Parts Inc. Chipotle Mexican Grill Inc. rose 2.63% after Piper Jaffray increased the price target of this restaurant chain, citing the improving fundamentals due to strategic initiatives. Dollar General Inc. also rebounded from its recent slump following stock upgrade by Barclays.
The 10-year Treasury yields settled slightly higher ahead of the keenly awaited Federal Reserve’s policy meeting starting tomorrow. While the markets broadly expect the central bank to leave the benchmark interest rates unchanged for now, investors will be looking for clues on the central bank’s plan to unwind its balance-sheet. Goldman Sachs Group Inc., Wells Fargo & Co and Morgan Stanley gained 2.12%, 2.11% and 1.62%, respectively.
Meanwhile, Industrials sector regained some of its lost ground, closing modestly higher by 0.87% despite deepening losses in Boeing Inc. The aircraft maker fell 1.51% on weekend reports that the U.S. Transportation Department has raised doubts of the Federal Aviation Administration’s (FAA) approval process of 737 MAX jet models. Other sectors participating in the day’s gains were Technology, Consumer Staples and Materials, all closing higher by 0.46%, 0.31% and 0.26%, respectively.
On the other hand, Facebook Inc. extended losses for the third straight session to drag the broader Communication Services sector lower. The social media giant gave up another 3.32% following stock downgrades and price target cuts by an analyst at Needham & Co., citing that the abrupt exit of several high-profile executives could spark similar exodus and hurt valuation. Defensives sectors also traded lower alongside a rise in Treasury yields. Real Estate, Utilities and Health Care all shed 0.67%, 0.50% and 0.12%, respectively.