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THE GIST (“THE WHAT”)
The S&P 500 struggled for direction ahead of the keenly-awaited meeting between President Trump and Chinese President Xi Jinping at the G20 Summit in Japan this week. Investors are cautiously optimistic that the two disputing global economies will resume their trade talks with an intention to chalk out a mutually beneficial trade deal to end the protracted trade tensions.
Trading in a very tight range and struggling to hold on to slight gains during the first half of trading session, the index pulled back in the afternoon to close the lackluster session slightly lower at 2945.35, down 5.11 points and losing 0.17% over previous session’s close. Six out of the eleven primary sectors closed lower, with Energy overshadowing modest gains in Materials and Consumer Staples sectors.
THE DETAILS (The “How & Why”):
Energy sector was the biggest drag on the index, posting 0.93% decline. Global crude prices fell to $64.86/barrel as investors weighed concerns of falling demand against intensifying U.S. – China tensions after President Trump imposed new financial sanctions on Iran. U.S. WTI (West Texas Intermediate) oil prices, however, settled higher at $57.90. Concho Resources Inc. and Pioneer Natural Resources Co were the worst decliners within this space, falling 3.42% and 2.53%, respectively.
Health Care was the other major decliner of the session, down 0.50%, led lower by a 7.42% plunge in Bristol-Myers Squibb Co after the pharmaceutical company announced a delay in its $74 billion acquisition plan of Celgene Corp until early 2020. Disappointing results of the phase 3 trial of its liver cancer drug further weighed down on its stock. Celgene Corp. also fell 5.50%.
Treasury yields slipped following weaker-than-expected manufacturing data, weighing down on banking and financial stocks. The 10-year Treasury yield registered its biggest one-day drop in three weeks to settle at 2.021%. Charles Schwab Corp., Capital One Financial Corp and Wells Fargo & Co fell 3.64%, 3.06% and 1.32%, respectively.
Meanwhile, limiting losses were modest gains in Materials stocks on the back of rising Gold prices and weakening U.S. dollar. Newmont Goldcorp Corp led the sector gains with a 2.53% jump. Consumer Staples and Technology were the other notable gainers of the quite session, up 0.27% and 0.15%, respectively.
While chip stocks remain under pressure on concerns of waning demand, Electronic Arts Inc. helped limit losses within the technology space. The video game giant was the top gainer of the session, jumping 3.85% following optimistic comments by an analyst citing potential of its new free-to-play game ‘Apex Legends’ to boost revenue. Corteva Inc. was the other major gainer, rising 2.94% on stock upgrade by an analyst at JPMorgan.