Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Tuesday, 11/13” will be posted around 8:30am EDT, Tuesday.
THE GIST (“THE WHAT”)
A dramatic sell-off in Technology stocks led the broader S&P 500 index lower for the third session in a row after. Apple Inc. and its suppliers fell sharply after one of the iPhone maker’s supplier; Lumentum Holdings Inc. reduced its quarterly revenue and earnings outlook, confirming speculations of falling iPhone demand after Apple Inc. cancelled production boost of its lower-priced iPhone XR line. Energy sector further weighed down on the index, falling sharply as oil prices registered their longest streak of declines.
Opening lower, the index maintained a steady stream of decline, giving up key technical support level of 200 DMA once again, after managing to stay above it for previous three sessions. Losses accelerated in the last hour of the trading to close near session lows at 2726.22, down sharply by 54.79 points and losing 1.97% over previous session’s close. Ten out of the eleven primary sectors ended the session lower in today’s broad-based sell-off.
THE DETAILS (The “How & Why”):
Technology weakness once again weighed down on the broader index. Lumentum Holdings Inc., one of the Apple Inc.’s key suppliers cut its second-quarter revenue and earnings outlook, citing weaker demand and reconfirming speculations of slowing iPhone demand after Apple Inc. cancelled production boost of its lower-priced iPhone XR line. J.P. Morgan cut its price target of the tech-giant from $270 to $266, further dampening confidence and sparking a dramatic sell-off in Apple Inc. and its suppliers.
Technology sector was broadly sold-off, down 3.54% on concerns of a slowing global economic growth that reflects in falling iPhone demand. Apple Inc. tumbled 5.04%, weighing down on the other FAANG stocks. Advanced Micro Devices Inc., NVIDIA Corp. and Broadcom Corp were the worst decliners within the sector, down 9.51%, 7.84% and 6.43% respectively.
Amazon.com Inc. plunged 4.41%, falling into a bear market and leading the broader Consumer Discretionary sector lower by 2.31%. Home Depot Inc. added to the losses, falling 3.53% ahead of its third-quarter earnings release.
Oil prices rebounded at the open after Saudi Arabia hinted at reducing its oil production to prevent a global supply glut. But prices pulled back in the later session to register their worst losing streak after President Trump warned Saudi Arabia against cutting oil production. Energy sector added to the day’s sharp declines, falling 2.14% alongside falling oil prices.
Financials, Industrials and Materials were the other notable decliners of the session, down 1.99%, 1.99% and 1.49% respectively. The U.S. dollar index hit a 17-month high on the back of a struggling Euro currency, weighing down on the metal and commodity prices across the board. General Electric Company was the biggest laggard within the Industrial space, plunging 6.88% after the struggling industrial conglomerate’s CEO admitted the urgent need to cut down on its debt load.
Meanwhile, Goldman Sachs Group led the Financials sector lower, tumbling 7.46% amid an ongoing legal dispute with the Malaysian authorities surrounding a multi-billion dollar bribery scandal. Real Estate was the only sector to offset the day’s sharp declines, up 0.20%.