Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
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For the last published Results of the Morning Trading Plans, please click here.
THE GIST (“THE WHAT”)
In its worst day of 2019, brutal selling across all primary sectors of the S&P 500 index sent the index tumbling to its June 6, 2019 level. In a move that most analyst saw as a retaliation against President Trump’s threat to slap a 10% tariff on all remaining Chinese imports, China let its currency to fall to its lowest level against the dollar in more than a decade while suspending all purchases of U.S. agricultural products.
Mirroring global markets, the index gapped sharply lower and continued being sold-off throughout the session. Technology stocks bore the brunt of today’s ugly selling as investors braced for a long protracted trade war between the world’s two largest economies. A slight rebound during the last few minutes of trading, however, helped the index to close slightly off of session lows at 2844.74, down sharply by 87.31 points and losing 2.98% over previous session’s close.
THE DETAILS (The “How & Why”):
Technology stocks were the most punished in today’s brutal sell-off, down 4.07% with all of the sector components sharply lower for the day. NVIDIA Corp tanked 6.45%, leading the declines within semiconductor stocks. Advanced Micro Devices Inc., Applied Materials Inc., Microchip Technology and Micron Technology all fell more than 4% apiece.
Among FAANG components, Apple Inc. tumbled the most by 5.23% in its worst day since May on concerns that the worsening trade war could impact the iPhone maker’s China sales which accounts for close to 10% of its total sales. Retail, grocery and departmental chain stocks fell across the board. Dollar Tree Inc., Best Buy Co, Home Depot Inc., Mattel Inc. and Macy’s Inc. all shed more than 3% apiece.
Global equity sell-off sparked a flight towards traditional safe haven assets like gold and Government bonds after China let the yuan weaken beyond the psychologically important 7 per dollar level for the first time in over a decade. The 10-year Treasury yields fell for the fourth straight session, posting its sharpest decline of 12 basis points to settle at 1.73%, its lowest level since October 2016.
Financials were the second worst performing sector, closing 3.25% lower amid concerns of flattening yield curve. Comerica Inc., Bank of America Corp and Morgan Stanley all fell 5.10%, 4.42% and 3.87%, respectively. Consumer Discretionary, Consumer Staples, Industrials, Health care, Communication Services and Energy all closed lower by more 2% each in today’s ugly selling. Real Estate, Materials and Utilities fell more than 1% each.
Bucking the trend, however, Tyson Foods Inc. was the top gainer of the session, jumping 5.10% after the meat processor posted better-than-expected quarterly results. A more than 1% rise in gold prices also boosted Newmont Goldcorp Corp by 1.38%.