Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Friday, 09/21” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
Ignoring the tensions around unresolved trade issues and breaking through the all-time highs of August 29, the S&P 500 registered fresh new highs with Technology sector in the lead.
Gapping higher at the open on the back of strong economic data, the index maintained steady gains with Technology and Materials leading the gains as investors continue to ignore simmering trade tensions in the background.
With nothing dampening investors’ confidence in today’s broad-based rally, the index closed near session highs at 2930.75, solidly by 22.80 points and gaining 0.78% over previous session’s close. Excluding Energy, all 10 primary sectors closed the session higher in today’s broad-based rally.
THE DETAILS (The “How & Why”):
A surprise fall in U.S. weekly jobless claims boosted investors’ optimism at the open. The number of Americans claiming for unemployment benefits reached a 49-year low, indicating strength in the job market.
Technology sector was the strongest performer, up 1.18%, leading the index to new record highs. Autodesk Inc. and Skyworks Solutions Inc. were the top gainers within the sector, up 3.25% and 3.09% respectively. Offsetting some of these sectorial gains, however, was a sharp 6.53% decline in Red Hat Inc. The software company was the worst decliners in today’s session on reporting disappointing earnings and a softer third quarter guidance.
Consumer Staples was the next best performer, up 1.16%. All the components within the sector traded higher for the day, led by 2.76% and 2.26% gain in Coty Inc. and Walgreen Boots Alliance Inc. respectively. Under Armour Inc.’s class A and class B spiked 6.61% and 5.03% after raising profit outlook for the fiscal year, leading the Consumer Discretionary sector higher by 0.66%. However, several retail stocks limited the sector gains. Nordstrom Inc. and Kohl’s Corp. were among the worst performers of the session, down 4.85% and 3.23%, weighing down on other retailers.
Defensive sectors also bounced back from yesterday’s sell-off in today broad-based rally. Health Care, Real Estate and Telecommunications sectors closed with 0.93%, 0.76% and 0.45% gains, respectively. Utilities stocks were also slightly higher for the day by 0.12%.
The dollar continued its slide to a seven-week low with easing of trade jitters, lifting commodities and metal prices across the board and helping the Materials and Industrials sectors by 1.05% and 0.11%. Treasury yields also climbed higher on the back of strong economic data, with the 10-year Treasury yield settling at a 4-month high of 3.064%. Financial stocks gained 0.80% alongside rising yields.
The only sector to close the session lower was Energy, down slightly by 0.06%. Oil prices reversed its trend, falling after President Trump criticized OPEC in his tweet, announcing his displeasure over steadily rising oil prices. His attack on the OPEC comes ahead of a meeting of OPEC and other oil producers on Sunday to discuss the supply allocation in the face of the Iranian sanctions.