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THE GIST (“THE WHAT”)
The S&P 500 index closed the choppy session virtually unchanged as investors await development around U.S. – China trade negotiations and the start of the earnings season next month. While dismal economic data out of Germany, Eurozone’s largest economy dampened sentiment at the open, better-than-expected manufacturing data out of the U.S. fueled the demand for U.S. Government bonds. Treasury yields slipped for the sixth session in a row, boosting dividend-paying defense play stocks.
Trading lower and chopping within a narrow range during the early session, the index edged higher but struggled to maintain the modest gains on the back of a thin trading volume. Gains, however, lost steam during the last few minutes of the session. With seven out of the eleven primary sectors closing with decent gains, the index closed the choppy session virtually unchanged at 2991.78, down fractionally by a 0.29 point.
THE DETAILS (The “How & Why”):
Treasury yields logged the longest losing streak this year, falling for the sixth session in a row as investors continue piling up on safe haven assets amid dwindling prospects of global economic growth. Germany’s manufacturing data for September fell to its lowest level in more than a decade, stoking concerns of global recession. Meanwhile, better-than-expected IHS Markit manufacturing data came in at a five-month high, fueling demand for U.S. Government bonds.
The 10-year Treasury yield fell 5 basis points to settle at 1.704%, boosting dividend paying defense-play stocks amid investors hunt for yields. Consumer Staples, Utilities and Real Estate, all closed higher for the day. Financials received a boost from a 1.23% jump in American Express Co, after the credit card company announced a buy-back of 120 million shares while raising its quarterly dividend by 10%.
Consumer Discretionary, Technology and Energy also posted modest gains. Ulta Beauty Inc., Advance Auto Parts Inc. and CenturyLink Inc. were the top gainers of the session, all gaining more than 3% apiece. Equinix Inc., CarMax Inc. and Parker Hannifin Corp. were the other strong performers, all climbing more than 2% apiece.
Offsetting these advances, Health Care stocks gave back some of their recent strong gains on the back of profit-taking and logged the biggest percentage decline of the session, down 0.61%. Incyte Corp. and Abiomed Inc. led the space lower with a 4.40% and 3.50% decline, respectively.
Netflix Inc. weighed down on Communication Services space, falling for the forth session in a row by 1.78% and erasing the gains for the year amid intensifying competition in the video streaming business. Facebook Inc. further fueled losses within this space, shedding 1.64% following reports that Snap Inc. is talking to federal regulators about Facebook’s anti-competitive tactics.