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THE GIST (“THE WHAT”)
Lacking any news around trade and economic data, the S&P 500 closed the choppy session unchanged at 2978.43, marginally below previous session’s close. Better-than-expected economic data out of U.K and Germany lifted the index and Treasury yields higher during the early session. Gains, however, lost steam as rotation out of defensive sectors and into cyclical stocks alongside rising yields dragged the broader index lower.
Energy stocks led the advances as oil prices soared to a 6-week high after the new Saudi oil minister reaffirmed his commitment to production cuts. Weakness in interest-sensitive defensive stocks offset gains in Energy and Financials stocks. Technology stocks were another major drag on the index amid increasing regulatory concerns on big-tech companies.
THE DETAILS (The “How & Why”):
Saudi Arabia’s new energy minister Prince Abdulaziz reaffirmed his commitment to production cuts in order to maintain oil prices from sliding into a bear market. Oil prices surged to a 6-week high, boosting Energy stocks alongside by 1.85% to lead the day’s advances. Helmerich & Payne Inc. and National-Oilwell Varco Inc. were the top gainers within this space, soaring more than 8% apiece. Concho Resources Inc. and Cimarex Energy Co were the other major gainers, gaining more than 6% apiece.
Positive economic data out of Germany and U.K., coupled with easing of trade jitters helped lift Treasury yields. China offered to buy an unspecified quantity of U.S. agricultural goods in return of easing restrictions on Huawei Technologies. The 10-year Treasury yield settled higher at 1.648%. Banks and other Financials stocks added to the gains, closing 1.54% higher. Bank of New York Mellon Corp, M&T Bank Corp and Citigroup Inc. gained 5.69%, 5.26% and 4.27%, respectively.
Strong gains in Energy and Financials sectors were offset by weakness in defense-play sectors as yields climbed higher across the curve. Health Care, Real Estate, Utilities all posted modest losses. With the U.S. dollar gaining traction as investors closely monitor the political showdown over Brexit, dollar-sensitive Materials stocks traded lower in today’s choppy session.
Technology was the other modest decliner of the session, closing 0.72% lower, led by 4.20% decline in Paypal Holdings Inc. Alphabet Inc. shed close to 1% mid-session, albeit recovering to end the session mostly unchanged following reports that attorneys general from 50 states will launch an antitrust probe against Google’s advertisement business.