Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
For the Outlook, Forecast, and Trading Plans published this morning, please click here
For the Results of the morning’s Trading Plans, please click here.
THE GIST (“THE WHAT”)
Euphoria over the much-expected temporary trade truce between the U.S. and China over the sidelines of G20 Summit in Japan during the weekend lifted the S&P 500 index solidly higher at the open. Technology stocks soared on news that the Trump administration will ease restrictions on Huawei Technologies as both disputing countries restart their trade talks.
The index hit a record intraday high at the open. Gains, however, lost steam as investors digested the trade truce which mostly lacked in details. A late session rebound helped the index to close off of session lows and register a new record close at 2964.33, up 22.57 points and gaining a modest 0.77% over previous session’s close. Technology and Financials led the advances while defensive sectors partially offset these gains amid rising risk appetite for growth stocks.
THE DETAILS (The “How & Why”):
China-exposed stocks rallied after the U.S. agreed to hold off on slapping any new tariffs while they restart their negotiations. In a surprise move, President Trump eased restrictions on Huawei Technologies, boosting Chip stocks solidly higher at the open.
Skyworks Solutions Inc., Qorvo Inc. and Microchip Technology Inc. jumped 6%, 5.96% and 5.42%, respectively, leading the broader Technology space higher by 1.45%. Western Digital Corp. and Broadcom Inc. soared more than 4% each. Apple Inc. fueled the gains, rising 1.83% on hopes that the iPhone maker could benefit from easing trade tensions.
Treasury yields edged up alongside fading demand for safe-haven assets with easing trade jitters. The 10-year Treasury yield rose by 3.2 basis points to settle at 2.033%. Banks stocks were the other major gainers of the session, lifting the broader Financials sector by 1.14%. Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. all gained more than 1%.
Better-than-expected revenues reported by the Macau gaming authority for the month of June boosted casino stocks. Wynn Resorts Ltd soared 5.86% to be one of the top gainers of the session. Other sectors posted modest gains amid fading euphoria over the trade truce which lacked in details and kept the existing trade tariffs in place.
Rising yields weighed down on defensive sectors. Utilities and Real Estate sectors shed 0.31% and 0.29%, respectively amid rising risk appetite for growth stocks. Among individual stock movers, Coty Inc. posted the worst declines, tumbling 13.51% in its worst day on record after it announced a turnaround plan that could cost the beauty products manufacturer a one-time cost of $600 million. Boeing Inc. also shed another 2.07% amid ongoing probe against its 787 Max planes.