Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Friday, 03/08” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
Logging a four-day losing streak, the S&P 500 index breached the key technical support level amid growing signs of a slowing global economy, coupled with a lack of clarity around U.S. – China trade negotiations. Disappointing earnings and falling yields also weighed down heavily on the index.
Mirroring global stocks, the index fell sharply at the open following ECB’s grim forecast that reaffirmed concerns of slowing global growth. Losses accelerated in the afternoon session alongside intense selling within Consumer Discretionary and Financial sectors, dragging the index below the key technical support level of 200 DMA (now at 2750.81).
Except Utilities, all the other ten primary sectors were broadly sold off to close the choppy session off of day’s lows at 2748.93, down 22.52 points and losing 0.81% over previous session’s close.
THE DETAILS (The “How & Why”):
The European Central Bank (ECB) slashed its growth forecast for 2019, confirming fears of weakening global growth. In a surprise change in its policy statement, the central bank announced additional stimulus measures while deciding to leave its benchmark interest rates unchanged until 2020. Investors will be looking forward for Friday’s U.S. jobs report that could shed some more light on the health of the economy.
Treasury yields fell sharply across the board and the dollar rose for the seventh straight session following the ECB announcement as investors piled up on safe haven assets. The Financials sector was broadly sold off alongside falling yields to close the session lower by 1.06%.
Consumer Discretionary was the worst performing sector, down 1.37%, led by a sharp 9.95% decline in Kroger Co. The grocery store chain sparked an intense selling in grocery stocks after missing earnings expectations and posting a disappointing outlook, citing growing competition from online retailers. Amazon.com Inc. also fell 2.58% after announcing its plan to close all of its pop-up stores within the country.
Semiconductor and other big-tech stocks were hit hard on fears of slowing global economy. Oil prices extended their slide as investors weighed falling global demand against rising domestic stockpiles, sending Energy stocks lower.
Technology, Communication Services, Materials, Health Care and Industrials were the notable decliners in today’s choppy session. On the bright side, falling yields increased demand for bond-proxy stocks. The only sector not participating in day’s declines was Utilities, closing the session higher by 0.26%.