Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Friday, 06/07” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
Building on last week’s optimism, the S&P 500 index inched closer to all-time highs on reports that the U.S. and Mexico have agreed on a deal to avoid tariffs on Mexican imports. Gains, however, lost steam mid-session on registering session highs at 2904.77 amid lingering U.S. – China trade tensions.
Retail, Technology and Financials stocks led the index higher to log a 5-day winning streak that nudged the index to close 2.28% away from record-highs of May 1, 2019, albeit near session lows at 2886.73, up 13.39 points and gaining 0.47% over previous session’s close.
THE DETAILS (The “How & Why”):
Retail stocks were among the strongest gainers in today’s session, regaining ground following an intense sell-off on the back of intensifying U.S. – China trade tensions coupled with disappointing earnings and dismal outlook provided by several key retail companies.
Macy’s Inc. was the top gainer of the session, jumping 6.07%. Wynn Resorts Ltd, MGM Resorts International and Amazon.com Inc. were the other notable gainers within the Consumer Discretionary space, all rising more than 3% each and lifting the sector to close 1.05% higher.
Analog Devices Inc. led semiconductor stocks higher after Goldman Sachs double ungraded its stock from ‘buy’ to ‘sell’. Applied Materials Inc., Lam Research Corp., Microchip Technology, NVIDIA Corp. and Qualcomm Inc. all rose more than 2% each. Salesforce.com Inc., however, capped the gains within the Technology space, falling sharply by 5.26% on announcing its plans to buy a leading analytics platform Tableau Software for $15.3 billion that is expected to weigh down on the chipmaker’s EPS for the next fiscal year.
Meanwhile, easing of U.S. – Mexico trade tensions helped lift 10-year Treasury yield to settle at 2.154%. Goldman Sachs Group Inc. and Citigroup Inc. rose more than 2% each to lead modest gains within the Financials space. Investors will be looking forward for CPI and PPI data, key measures of inflation to vindicate the growing expectations of a rate cut by the central back.
Defensive sectors lagged in performance, suggesting a risk-on sentiment in today’s session. Utilities and Real Estate closed 0.60% and 0.30% lower alongside rising Treasury yields. A 3.13% decline in United Technologies Corp. weighed down heavily on the Industrials space after the industrial conglomerate announced its merger with defense company Raytheon Company to create the country’s second largest aerospace and defense company after Boeing Inc.