Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 03/26” will be posted around 8:30am EDT, Tuesday.
THE GIST (“THE WHAT”)
Recession jitters weighed down on investor sentiment for the second session in a row. Banks stocks extended their slide as the spread between the 3-month and 10-year Treasury yields further deepened into negative territory on concerns of a global economic meltdown.
The S&P 500 index struggled for direction as Technology and Financials stocks led the declines which were partially offset by Consumer Discretionary and Industrials sectors. Flirting with the key technical level of 2800, the index whipsawed between gains and losses but closed the choppy session mostly unchanged at 2798.36, down only 2.35 points over the previous day’s close.
THE DETAILS (The “How & Why”):
Banking and financial stocks were intensely sold-off last week after the yield curve between the short-term 3-month Treasury notes and longer-term dated 10-month Treasuries inverted for the first time since 2007. While the broader Financials sector attempted to rebound at the open, it was pulled back as yields extended their slide, closing the session 0.39% lower.
Investors continued piling up on safe-haven bonds amid growing pessimism around global economic meltdown, sending yields lower. The benchmark 10-year Treasury yield hit its lowest level since December 2017 and further deepened the spread between the 3-month and 10-year Treasury yields into negative territory.
Technology was the worst performing sector of today’s choppy session, down 0.40%. Semiconductor stocks led the sector declines on concerns of falling global demand for memory chips. Akamai Technologies Inc., Micron Technology Inc. and Texas Instruments Inc., all gave up more than 2% each. Apple Inc. also weighed down heavily on the technology space, falling 1.21% after the tech-giant unveiled several new subscription services during the special ‘Apple event’ in an attempt to offset stalling iPhone sales.
Communication Services and Materials were the other sectors adding to the day’s declines by 0.19% and 0.16% respectively. Oil prices also settled slightly lower on growing concerns of falling global energy demand, weighing down slightly on Energy stocks.
Meanwhile, sectors supporting decent gains were Consumer Discretionary and Industrials, closing modestly higher by 0.56% and 0.24% respectively. Retail, department chain, apparel stores and home furnishing traded broadly higher. L Brands Inc., Kohl’s Corp and Foot Locker Inc. all rose more than 2% each. Boeing Inc. gained some of its lost ground, jumping 2.20% after several airlines voiced their support for the aircraft maker as it moves closer to update its 737 Max software.