Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 11/06” will be posted around 8:30am EDT, Tuesday.
THE GIST (“THE WHAT”)
The S&P 500 index opened the week on a positive note as Energy, Financials and defensive sectors outweighed weakness within the Technology stocks to close modestly higher at 2738.31, up 15.25 points and gaining 0.56% over previous session’s close.
Holding on to the critical support level of October lows at 2710; the index faces resistance at 200 DMA as price action continues to be confined within these key technical levels. Eight out of the eleven primary sectors closed the session higher. Gains, however, remained capped ahead of the U.S congressional mid-term elections.
THE DETAILS (The “How & Why”):
Treasury yields edged lower at the open, benefitting defensive sectors. Real Estate was the best performing sector, up 1.69% followed by Utilities and Consumer Staples, up 1.39% and 1.21% respectively. Yields, however, pared decline in the afternoon session following a lackluster debt auction of $37 billion 3-year U.S. government bonds. Investors will be looking forward to the closely watched 2-day FOMC, starting Wednesday for clues on further monetary tightening by the Federal Reserve, given a bunch of strong economic data that was released last week.
Energy sector fueled the day’s gains, rising broadly by 1.61%. Oil prices closed the session relatively unchanged after the Trump administration formally imposed sanctions on Iranian oil but granted temporary waivers to eight importing countries. EQT Corp. and Cabot Oil & Gas Corp. were the top gainers of the session, up 8.34% and 5.87% alongside a spike in natural gas prices on the back of colder weather forecast across the U.S. this month. Chevron Corp. rose 3.67% following a stock upgrade by Credit Suisse, citing strong free cash flow and valuation, further boosting sentiment within the broader sector.
Financials sector was led higher by Berkshire Hathaway Inc. The financial conglomerate rose 4.68% on reporting better-than-expected quarterly results with its operating profit doubling to $6.9 billion in the third quarter.
Health Care and Industrials were the other modest gainers of the session, up 0.84% and 0.53% respectively. While the Materials sector traded lower during the early session, the sector pared losses in the latter session with metals and commodities receiving a boost from a falling dollar index.
On the other hand, capping the day’s gains and dragging the index lower were Technology and Consumer Discretionary sectors, down 0.18% each. Apple Inc. tumbled for the second straight day, declining 2.84% and falling into correction territory on news that the tech giant has planned to cancel the production boost for its lower-priced iPhone XR line. Further fueling this decline was a stock downgrade by Rosenblatt Securities, citing slowing iPhone sales. Apple suppliers also extended their slide. Qorvo Inc., Skyworks Solutions Inc. and Broadcom Corp shed 6.32%, 2.66% and 0.31% respectively.
Amazon.com Inc. fell 2.27% after it announced its plan to offer free shipping to all customers this holiday season. News reports that the Trump administration plans to dig into the antitrust violations committed by the e-commerce giant further weighed down on the e-commerce giant. Limiting losses within the Consumer Discretionary sector were retail and departmental chains that were strong performers in today’s session.