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THE GIST (“THE WHAT”)
Building on Wednesday’s late session rally, the S&P 500 traded higher during the early hours, edging closer to all-time highs following better-than-expected economic data. Early gains, however, lost steam on registering the day’s high at 3021.99, as markets monitored mixed messages around U.S. – China trade talks that are expected to resume on Friday.
Sector-wise performance was mixed with defensive stocks faring relatively better as Treasury yields inched lower a day after the Fed cut its benchmark interest rate for the second time this year. The index closed flat for the day at 3006.79, up fractionally by only 0.06 point over previous session’s close.
THE DETAILS (The “How & Why”):
Bucking the trend, Bank of Japan and the Bank of England left their benchmark interest rates unchanged, further fueling the demand for U.S. government bonds. Yields edged lower as concerns around liquidity eased following the New York Fed’s repo action for the third day. The New York Fed injected liquidity into the financial market after the overnight rate at which banks lend to each other spiked amid an oversupply of bonds and corporate tax payments.
The 10-year yield settled lower at 1.79%. On the economic data front, existing-home sales in the month of August jumped 1.3%. The Philadelphia Federal Reserve’s manufacturing index fell to 12.0 in September from a 16.8 reading in August, although coming in above the expected reading of 10. The jobless claims for last week came in at the expected reading of 208,000.
Defensive stocks fared relatively better in today’s session, with Health Care stocks leading the day’s advances by 0.47%. Utilities posted modest gains of 0.36%. Real Estate stocks also remained in demand following a robust existing home sales data for the month of August. The sector closed higher by 0.28%.
Technology and Materials also added to gains. Microsoft jumped 1.84% after announcing a $40 billion buyback program and raising its quarterly dividend. Seagate Technology, however, capped gains within Technology space, tumbling 6.71% after slashing its long-term margin guidance.
Meanwhile, volatility in oil prices pushed the prices higher amid doubts that Saudi Arabia might not be able to replace the lost supply within few weeks. Energy stocks, however, shed 0.39% led by a 6.04% decline in EQT Corp. Noble Energy Inc. and Devon Energy were the other major decliners within this space, falling 3.88% and 2.04%, respectively.
Financials also gave back some of their previous session’s gains as yields inched lower. Retail and departmental chain stocks fell broadly, dragging the Consumer Discretionary sector lower. Darden Restaurant Inc. fell 5.07% on posting a mixed quarterly results and issuing weaker-than-expected full-year guidance. Macy’s Inc., Ralph Lauren Corp. and Kohl’s Corp., all shed more than 2% each.