Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Friday, 03/29” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
Whipsaw price action continues with the S&P 500 index consolidating between key technical levels, as markets search for a major catalyst to break out in either direction. Trading higher during the early hour, the index pulled back on registering the day’s high of 2819.71 following comments by White House economic advisor Larry Kudlow that the U.S. – China trade talks could extend for weeks or even months.
An unexpected decline in jobless claims helped ease the decline in Treasury yields, boosting risk appetite and lifting the index during the last hour of the session. The index closed the choppy session near day’s highs at 2815.44, up 10.07 points and gaining 0.36% over previous session’s close. Sector-wise gains were broad-based and modest across nine out of the eleven primary sectors. Utilities and Communication Services were the only laggard in today’s choppy session.
THE DETAILS (The “How & Why”):
Materials sector closed 0.95% higher, leading the day’s advances alongside rising metals and commodity prices. Financials also gained ground as Treasury yields inched up following a mixed bag of economic data. The U.S. weekly jobless claims fell unexpectedly for the week ended March 23, indicating that the labor market remains strong.
The 10-year Treasury yield settled slightly higher at 2.405%, but still below the 3-month Treasury yield which settled at 2.43%. Wells Fargo & Co, Citigroup Inc. and Morgan Stanley rose 3.32%, 2.06% and 1.35%, respectively.
Industrials, Real estate and Consumer Discretionary were the other notable gainers, up 0.77%, 0.72% and 0.58%. PVH Corp. was the top gainer of the session, soaring 14.76% after the parent company of clothing brands including Van Heusen, Tommy Hilfiger, and Calvin Klein posted impressive fourth-quarter earnings.
Lagging the gains were Health Care, Energy and Technology sectors, all higher by 0.26%, 0.37% and 0.38%, respectively. Oil prices traded sharply lower following President Trump’s tweets asking the OPEC to increase oil production to tame prices. Oil prices however, recouped losses in the latter session to close relatively unchanged.
With Treasury yields stabilizing, bond-proxy Utilities stocks fell sharply across the board, closing lower by 1.25%. PPL Corp and Edison International were the worst decliners within the sector, losing more than 2% each. Meanwhile, telecom stocks were led lower by Verizon Communications Inc. that fell 2.96% following reports that some U.S. regulators opposed the merger between Sprint and T-Mobile.