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”)
With several market-moving events on investors radar this week, the S&P 500 pulled back from last week’s all-time record close. As the busy earnings seasons rolls on, investors will be closely monitoring developments around the U.S. – China trade talks and the Fed’s latest monetary policy decision on Wednesday.
Falling sharply at the open, the index bounced off the day’s low of 3,014.30. Trading within a tight range for most part of the afternoon session, the index closed slightly lower at 3020.97, down 4.89 points and losing 0.16% over previous session’s close. Benefiting from a slide in Treasury yields, defensive sectors outperformed to offset weakness in Financials and Consumer Discretionary stocks.
THE DETAILS (The “How & Why”):
Treasury yields slipped slightly ahead of the key monetary policy decision by the Federal Reserve, with the 10-year Treasury yield settling 2.5 basis points lower at 2.056%. Financials was the worst performing sector of today’s session, closing 0.78% lower. Wells Fargo & Co, Morgan Stanley and Goldman Sachs Group Inc. fell 2.07%, 1.11% and 0.82%, respectively.
Consumer Discretionary and Communication Services were the other major decliners, closing lower by 0.58% and 0.47%. Amazon.com Inc. extended previous session’s decline by 1.57% after reporting a reduction in profits due to higher-than-expected cost of the online retail giant’s one-day delivery initiative. Except Apple Inc. that jumped 0.93% ahead of its earnings release, all the other FANG components traded lower.
The U.S. Dollar traded near its two-months high ahead of the first benchmark interest rate cut by the Fed since the financial crisis, weighing down on trade-sensitive Material stocks by 0.34%. Albemarle Corp, Mosaic Co and FMC Corp were among the worst decliners within this space, registering more than 1.5% decline apiece. Meanwhile, a 1.39% decline in Boeing Inc. on ongoing concerns around the production shutdown of its flagship 737 Max fleet dragged the broader Industrials sector lower.
On the other hand, limiting day’s losses were interest-sensitive defensive sectors that benefited from sliding yields. Utilities, Real Estate, Health Care and Consumer Staples were all modestly higher by 0.49%, 0.46%, 0.41% and 0.25%, respectively.
Generic drug makers received a boost from reports of a merger between Mylan N.V. and Pfizer Inc. The largest drug maker of the world, Pfizer Inc., announced that it will merge its off-patent branded and generic drugs business with Mylan. While Pfizer Inc. slipped 3.81%, Mylan N.V. surged 12.57% to be the top gainer of the session.