Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Friday, 04/12” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
The S&P 500 index was unchanged for the day as investors brace for the first quarterly earnings season to be officially kick started by major banks tomorrow. Price action and trading volume remains muted as markets wait for a catalyst to break out of the consolidation range it has been confined within amid expectations of an earnings recession and growing concerns of slowing global economic growth.
Trading slightly higher during the early session, the index took a leg lower in the afternoon led by falling Energy and Health Care sectors. Strength in Industrials and Financials however helped to pare declines. The index closed the choppy session only fractionally higher by 0.11 point at 2888.32.
THE DETAILS (The “How & Why”):
On the economic data front, jobless claims came in at its lowest levels in 49 years, indicating a robust labor market and easing some concerns of an impending recession. The Producer-Price Index (PPI) was 0.6% higher for the month of March and 2.2% higher year-on-year primarily due to the rise in gas prices, hinting at the absence of inflation pressures. Treasury yields settled mostly higher following upbeat economic data.
Industrials gained some of its lost ground to be the best performing sector in today’s choppy session, up 0.88%. Boeing Inc. rose 1.44% after its CEO announced that a fix for the troubled 737 MAX jet has already been tested. Airline and transportation stocks traded higher for the day, boosting sector gains.
Financials closed modestly higher by 0.56% ahead of the big banks earnings tomorrow. JPMorgan Chase & Co and Wells Fargo & Co will report tomorrow, followed by Citigroup Inc. and Goldman Sachs Inc. on Monday. Bank of America Corp. and Morgan Stanley are due to report on Tuesday.
Utilities closed modestly higher by 0.55%. Consumer Discretionary, Consumer Staples and Communication Services posted slight gains of 0.12%, 0.11% and 0.15%, respectively.
Among the decliners, Health Care stocks were the biggest drag on the index, down sharply by 1.21%. Health insurers were broadly lower a day after U.S. senator Bernie Sanders announced his plan to pass the ‘Medicare-for-all’ bill. UnitedHealth Group Inc., Anthem Inc. and Centene Corp. were the worst decliners of the session, falling 4.31%, 4.08% and 3.77%, respectively.
Meanwhile, oil prices fell sharply on reports that OPEC could raise output to compensate for the falling supply from Venezuela and Iran in an attempt to keep prices under control. The EIA reported a massive 7 million barrels of surge in U.S. crude inventories, further weighing down on oil prices. Concho Resources Inc. fell 2.79% to be the worst decliner within the Energy space. The broader sector, however, was relatively unchanged for the day.