Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
For the Outlook, Forecast, and Trading Plans published this morning, please click here.
For the Results of the morning’s Trading Plans, please click here.
THE GIST (“THE WHAT”)
Investors continued to cheer a dovish shift in Fed policy, bolstering the S&P 500 to register a record close. Sliding Treasury yields, weakening dollar and surging oil prices helped overshadow escalating geopolitical concerns that weighed on the market during the early session.
Gapping significantly higher at the open, the index erased most of the early gains amid growing U.S. – Iran conflict after President Trump criticized Iran for attacking U.S. surveillance drone. Soaring oil prices, however, boosted the index higher in the afternoon session to close at record highs at 2954.18, up 27.72 points and gaining 0.95% over previous session’s close. All the eleven primary sectors participated in today’s broad-based rally as the index logged a four-day winning streak to record highs.
THE DETAILS (The “How & Why”):
Treasury yields extended their descent after the Federal Reserve signaled at a rate cut as early as July, barring any improvement in the economic data. The 10-year yield slipped below 2% for the first time since November 2016, but managed to hold on to the psychologically important level to settle at 2.012%.
The dollar further weakened against other major currencies to help support gains in riskier growth assets. Meanwhile, oil prices surged more than 5% to register a largest one-day gain of the year on concerns of intensifying U.S. – Iran conflict after Iran shot down a U.S. military drone.
Energy was the best performing sector in today’s broad-based relief rally, up solidly by 2.21%. Industrials, Technology and Materials were the other strong gains, up 1.62%, 1.43% and 1.21%, respectively.
Oracle Corp. was the top gainer of the session, soaring 8.18% to close at record highs after the software and database giant beat revenue and earnings expectations. Noble Energy Inc., HollyFrontier Corp. and Halliburton Co. posted strong gains of 6.15%, 5.36% and 4.91%, respectively.