Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
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For the last published Results of the Morning Trading Plans, please click here.
THE GIST (“THE WHAT”)
Taking a breather from a solid three-session rally, the index closed slightly lower amid growing skepticism around the ‘partial U.S. – China trade deal’ that was flaunted by President Trump as a major victory for his trade agenda.
Struggling for direction and chopping within a 10-point range on the back of a relatively low trading volume, the index closed the session at 2966.15, down 4.12 points and losing 0.14% over previous session’s close. Nine out of the eleven primary sectors traded lower, with Materials leading the declines.
THE DETAILS (The “How & Why”):
Investors cheered on Friday over a limited trade agreement between the U.S. and China that lacked details around structural issues and has yet to be documented. Skepticism crept in following headlines that China reportedly wants to have additional trade talks to iron out the nitty-gritty before signing the ‘partial trade deal’ that was touted by President Trump as a ‘very substantial phase one deal’.
Comments by Treasury Secretary Steven Mnuchin that the next round of tariffs will go into effect in December if a deal is not reached by then, further kept investors on the edge. Meanwhile, the U.S. Dollar strengthened amid growing uncertainty around the trade deal and dimming hopes of an orderly Brexit. Oil prices also settled sharply lower for the day.
Materials sector were the biggest percentage decliners alongside strengthening dollar, down 0.75% led by a 3.19% decline in Mosaic Co. after the largest U.S. producer of potash and phosphate fertilizer announced that it will temporarily curb production at its Esterhazy potash mine. Utilities and Consumer Staples were the other notable decliners of the choppy session, down 0.67% and 0.43%, respectively.
A sharp 7.80% plunge in IPG Photonics Corp. weighed down on the Technology sector. Hewlett Packard Enterprise Co, however, limited the losses within this space, jumping 4.18% following stock upgrade by Evercore ISI citing strong cash flow and attractive valuation.
Meanwhile, Financials held on to slight gains ahead of the key bank earnings. Investors will be closely reading into the third-quarter results of Citigroup, Goldman Sachs, J.P. Morgan Chase and Wells Fargo in the wake of falling interest rates. Real Estate was the only other sector to buck the trend and close slightly higher in today’s choppy directionless session.