Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 08/21” will be posted around 8:30am EDT, Tuesday.

THE GIST (“THE WHAT”)

Opening the week on a positive note, the S&P 500 index extended gains for the third straight day. Announcement of a couple of billion dollar deals and rising commodities and oil prices helped lift the index closer to the all-time highs. Optimism was however capped as investors’ bullishness remains cautious over the potential easing of U.S. – China trade tensions ahead of the planned trade talks.
Swinging between a narrow range the index held on to the gains for most part of the session. Registering the day’s high of 2859.76 (Just 0.24 point away for the upper bound of the choppy trading range indicated by our models! Click here to read the full text), the index took a leg lower in the last few minutes of the session after President Trump reiterated his displeasure over rising interest rates. With eight out of the eleven primary sectors ending the session higher, the index closed off session highs at 2857.05, up 6.92 points and gaining 0.24% over previous session’s close.

THE DETAILS (The “How & Why”):

Easing of trade war jitters and a steadying dollar helped support commodities and metal prices for the third day in a row. Materials sector led the day’s advances with a 0.72% gain, led by a 2.71% rise in CF Industries Holdings Inc. Oil prices edged up for the third consecutive session on concerns of tightening supply ahead of the U.S. sanctions on Iran, lifting the broader Energy sector higher by 0.66%.
Several retail and department store stocks were among the top gainers in today’s session, extended recent gains on the back of solid quarterly results last week. Macy’s Inc. and Nordstrom Inc. led the broader sector with a 6.05% and 4.02% gain.  
Industrials and Health Care stocks were the other modest gainers in today’s session, up 0.64% and 0.31%. Lower jet fuel prices and rising travel demand helped lift airline stocks. American Airlines Group Inc. and United Continental Holdings Inc. were the best performers within the sector, up 5.82% and 3.91% respectively.
Financials stocks also closed the session modestly higher, up 0.35%, led by a 3.14% and 2.30% rise in Cboe Global Markets Inc. and Synchrony Financials respectively on stock upgrades. Treasury yields settled lower for the day as investors remain concerned with the deepening economic crisis in Turkey and other emerging markets. Investors will be keenly looking forward to the FOMC minutes release this week, looking for signs for any monetary policy changes by the Federal Reserve.