Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Friday, 03/22” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
A strong Technology-led rally boosted the S&P 500 index to close at a five-month high. The index rebounded from last two session’s losses as investors digested the latest monetary policy statement released by the Federal Reserve indicating no more rate hikes this year.
Treasury yields fell for the second straight session after the central bank cut its economic growth forecast, hurting banking and financial stocks. Except Financials, all other ten primary sectors rose higher led by Technology stocks. The index rallied higher on a steady momentum to close near session highs at 2854.88, up 30.65 points and gaining a solid 1.09% over previous session’s close.
THE DETAILS (The “How & Why”):
Apple Inc. jumped 3.68% to a four-month high after an analyst at Needham upgraded the company to a ‘strong buy’ ahead of next week’s ‘Big Launch Event’. The tech-giant sparked an intense rally in semiconductor stocks. Advanced Micro Devices Inc., Qorvo Inc. and Seagate Technologies climbed 8.52%, 6.90% and 5.99%, respectively.
Micron Technology Inc. further fueled the gains in chip maker stocks by rising 9.62% after posting its quarterly results that beat estimates. Western Digital Corp and Electronic Arts Inc. were the other strong performers of the session, up 9.77% and 8.09%.
Treasury yields fell across the board, getting closer to the yield-curve inversion on concerns of a slowing economic growth after the Federal Reserve reduced its GDP growth estimate for 2019 to 2.1% from 2.3%. The 10-year Treasury yield settled at its lowest level in 15 months, sending banks and other financial stocks lower. The broader Financials sector extended declines, closing 0.30% lower.
Lower yields, however, boosted defensive sectors in today’s broad-based rally. Real Estate, Consumer Staples and Utilities outperformed the index, closing higher by 1.79%, 1.19% and 1.05%, respectively. Conagra Brands Inc. was the top gainer of the session, soaring 12.75% on topping earnings expectations. Olive Garden parent Darden Restaurants Inc. also soared 6.87%, leading the Consumer Discretionary sector higher on posting impressive quarterly results.
While the broader Health Care sector participated in the day’s gains by closing modestly higher by 0.35%, gains within the sector were limited due to plunge in Biogen Inc. The pharmaceutical giant tumbled 29.23% in its worst day in 14 years after the drug maker announced that it will discontinue the trial of its much-awaited Alzheimer’s disease drug Aducanumab, citing that the interim analysis conducted by an independent monitoring committee were inconclusive.