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 last published Results of the Morning Trading Plans, please click here.
THE GIST (“THE WHAT”)
Underscoring the relevance of trade and economy related news; the S&P 500 pared early session losses despite the impeachment drama dominating the headlines. Wednesday’s gains fizzled at the session open amid reports that the U.S. is unlikely to extend the temporary waivers given to domestic suppliers selling to Huawei Technologies.
The index pared losses after China’s foreign Minister signaled that China is willing to buy more American agricultural products. With Treasury yields declining, defensive stocks remained in favor, outweighing the weakness in Energy stocks and lifting the index to close well off of the session lows at 2977.62, down 7.25 points and losing 0.24% over previous session’s close.
THE DETAILS (The “How & Why”):
Trade skepticism kicked in following reports that the U.S. might not extend the temporary waivers granted to the U.S. suppliers selling to Huawei Technologies, sending stocks tumbling at the open. Semiconductors fell sharply lower led by Advanced Micro Devices Inc., DXC Technology Co, Qorvo Inc., Microchip Technology Inc. and Cisco Systems Inc. These stocks, however, settled off their session lows after China eased tensions by signaling its willingness to buy more U.S. products.
All of the FAANG components traded lower, with Facebook Inc. and Amazon.com Inc. sliding the most by 1.47% and 1.61%, respectively. Retail and restaurant stocks were broadly lower, led by a more than 1% decline in Macy’s Inc., Kohl’s Corp and Darden Restaurants Inc.
Carnival Corp fueled the losses within the Consumer Discretionary space and dragged the cruise operating stocks lower. The largest U.S. cruise operator tumbled 8.55% on missing earnings estimates and slashing guidance citing lower pricing and slowdown in bookings.
Energy sector posted the biggest percentage loss of 1.33%, despite oil prices trimming their early session slide amid reports that the U.S. will deploy military personnel in Saudi Arabia following attacks on its oil facilities. ConocoPhillips and Marathon Oil Corp were the worst decliners within this space, falling more than 3% each.
Reaction to the growing impeachment drama was mostly muted after the release of whistleblower report that accused President Trump of pressuring Ukrainian president to investigate Joe Biden and his son. On the economic data front, second-quarter GDP growth rate was in line with expectations at an annualized growth rate of 2%. The weekly jobless claim was also broadly in line with expectations at 213,000.
Treasury yields, however, edged lower as investors monitored the impeachment drama. Defensive stocks outperformed alongside sliding yields. While Utilities and Consumer Staples sectors posted modest gains in today’s choppy session, health-insurance and managed health care stocks weighed down heavily on Health Care space amid growing concerns of the impact of ‘Medicare for All’.