Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 10/02” will be posted around 8:30am EDT, Tuesday.
THE GIST (“THE WHAT”)
In an unexpected move, the U.S. and Canada announced a new revised deal late Sunday to replace NAFTA, renamed as United States-Mexico-Canada Agreement (USMCA). Opening the month and the quarter higher on trade optimism, further supported by rising oil prices, the index was, however unable to break through the resistance of all-time highs, falling back within the range it has been confined to within the last week as optimism remains capped due to the yet unresolved U.S. – China trade dispute.
Gapping higher at the open, the index registered the day’s high at 2937.06 (3.85 points short of record high of September 21) within the first hour of the session. While the index was led higher by Energy and trade-sensitive sectors, defensive sectors lagged to cap the day’s gains to close the session off day’s highs at 2924.59, up 10.61 points and gaining 0.36% over previous session’s close.
THE DETAILS (The “How & Why”):
Oil prices rallied to reach 2014 highs on concerns of global supply tightening ahead of Iranian sanctions, further boosted by trade optimism in today’s session. Energy sector was the best performing sector, up strongly by 1.47% alongside soaring oil prices. Hess Corp., ConocoPhillips and Marathon Petroleum Corp. were among the top gainers of the session, up 4.21%, 3.22% and 3.08% respectively.
Trade sensitive sectors received a major boost following positive trade news. Materials and Industrials rose modestly by 1.04% and 0.90%. Within the Materials space, Praxair Inc. climbed 5.06% on news that a proposed merger between Praxair Inc. and Linde AG has received antitrust clearance from the Chinese antitrust officials.
Industrials sector was led higher by a solid 7.09% rise in General Electric Co. after the struggling industrial conglomerate announced an abrupt ouster of its CEO John Flannery. Limiting the sectorial gains were airline stocks, broadly lower on the back of soaring oil prices. American Airlines Group Inc., Alaska Air Group Inc. and Delta Air Lines Inc. shed 4.16%, 1.60% and 2.13%, respectively.
Among the other notable gainers were Health Care, Technology and Financials, up 0.54%, 0.49% and 0.35%. Easing of trade tensions helped lift treasury yields, benefitting the Financials stocks but dragging the interest-sensitive sectors lower. Real Estate, Utilities and Communications sectors lagged the broader index by 0.85%, 0.30% and 0.11%. Consumer Discretionary and Consumer Staples also closed the session slightly lower by 0.20% and 0.06% respectively.