Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Friday, 09/14” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
Gapping higher at the open on the back of falling yields, the S&P 500 index managed to maintain the day’s gains as Technology stocks rebounded from the previous session’s slump. Gains, however, were capped as investors maintain their cautious stand amid trade policy uncertainties and the emerging market crisis.
Breaking above the trading range it was confined to over the past 7 sessions; the index registered the day’s high at 2906.76. (Opening under 2 points above the upper bound of the levels our models have been monitoring to confirm a bullish bias. Click here to read the full text.) Swinging within a tight range, the index held on to a steady momentum throughout the session, closing near session highs at 2904.18, up 15.26 points and gaining 0.53% over previous session’s close.
THE DETAILS (The “How & Why”):
Technology stocks outperformed the broader index, gaining 1.15% on the back of several chip stocks that recovered from their previous session’s sharp decline. Micron Technology Inc., Qualcomm Inc. and Qorvo Inc. led the sector higher, gaining 4.50%, 3.99% and 2.50% respectively. Apple Inc. also erased previous session’s losses, climbing 2.42% as investors digested the launch of its three new generation iPhones and a new Apple Watch Series 4. Advanced Micro devices, however, gave up some of its recent strong gains, shedding 5.37% on the back of profit taking.
A weakened dollar and optimism over the resumption of U.S. – China trade talks boosted trade sensitive Industrials and Materials sectors for the second session in a row, up 0.51% and 0.32% respectively. The dollar index extended its slide after the Consumer Price Index (CPI) data indicated that the consumer prices rose less than expected in the month of August, reaffirming a taming inflation suggested by the Producer Price Index (PPI) data released yesterday.
Treasury yields remained relatively unchanged following an unexpected fall in CPI growth rate. While the broader Financials sector shed 0.15% as yields edged lower, Health Care, Real Estate and Utilities sectors got a decent lift of 1.14%, 0.47% and 0.77% respectively. Meanwhile, the Telecommunications sector closed the session higher by 0.30%, led by a 0.78% rise in AT&T Inc.
Besides Financial stocks, the only other sector to negate the day’s gains was Consumer Staples. Several retail and department chains gave up some of their recent gains. Kroger Co. was the worst performer in today’s session, plunging sharply by 9.93% on missing sales estimates, dragging the broader sector down by 0.36%.