Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 09/18” will be posted around 8:30am EDT, Tuesday.
THE GIST (“THE WHAT”)
Weighed down by trade tensions, the S&P 500 index pulled back from its 5-day winning streak, falling back within the trading range it was confined to for a while. Opening lower following an intensified trade spat between the U.S. and China over the weekend, the index was further dragged down by weakness in the FANG stocks. President Trump announced that he could levy new tariffs on $200 billion worth of Chinese goods as soon as on Monday, with China vowing to retaliate.
While the index attempted to stabilize in the afternoon session, albeit trading lower, it fell to session lows during the last hour of the trading after President Trump said that an announcement on U.S. – China trade will be coming after the close. Primarily driven by Technology sell-off, the index closed near session lows at 2888.80, down 16.18 points and losing 0.56% over previous session’s close.
THE DETAILS (The “How & Why”):
Technology sector was broadly sold off on escalating trade spat between the U.S. and China. Apple Inc. fell 2.66% after an analyst hinted at weaker-than-expected preorder demand for its new products. Twitter Inc. was the worst performer within the sector, tumbling 4.18% after MoffettNathanson lowered the social-media giant’s price target citing rising cost pressures. Several chip stocks, including Micron Technology Inc. and Autodesk Inc. were among the worst performers of the session, down 3.25% and 3.06% respectively.
Amazon Inc. and Netflix Inc., although classified as Consumer Discretionary stocks but typically mirroring the Technology sector trend, were also sharply lower by 3.16% and 3.90%. The broader Consumer Discretionary sector shed 1.27% with several retail and department chain stocks also trading lower for the day.
A sharp 6.77% decline in Abiomed Inc. dragged the broader Health Care sector lower by 0.33%. Financial stocks also added to the day’s weakness, losing 0.36% as yields pulled back slightly from their 3% mark on trade war fears.
On the other hands, limiting the day’s losses were gains in Materials and Energy sectors, up 0.29% and 0.16%, benefiting from rising metals and oil prices on the back of a falling dollar.
Yield-sensitive Real Estate, Utilities and Consumer Staples sectors also supported the day’s gains, closing the session higher by 0.49%, 0.30% and 0.35% respectively as yields edged lower.