Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Friday, 09/28” will be posted around 8:30am EDT, Friday.
THE GIST (“THE WHAT”)
With no major news headline on trade front, the index rebounded from its 4-day losing streak on the back of rising tech stocks, albeit remaining range bound with no major catalyst in sight to push the index beyond the all-time highs. J.P. Morgan initiated coverage of Apple Inc. with an ‘outperform’ rating, boosting the broader Technology sector.
Opening higher following an upbeat economic data, the index erased some of the day’s gains as optimism remained capped amid trade and political news headline risks. Reversing trend on registering the day’s high at 2927.22, the index closed the session at 2914, up 8.03 points and gaining 0.28% over previous session’s close. Eight out of the eleven primary sectors traded higher in today’s relief rally.
THE DETAILS (The “How & Why”):
Defensive sectors were among the notable gainers of the session, erasing some of their last week’s weaknesses due to rising yields. Treasury yields stabilized after soaring over the last week as investors digested the unexpected exclusion of the term ‘accommodative’ in its monetary policy statement and Jerome Powell’s unchanged outlook of inflation. The 10-year Treasury yield settled mostly unchanged at 3.053%. Utilities, Health Care and Real Estate sectors were up 0.96%, 0.44% and 0.13% respectively.
Technology and the new Communications sectors were the strongest performers of the session, up 0.54% and 0.80%. Apple Inc. led the Technology sector higher with a 2.06% gain, after J.P. Morgan gave the tech-giant an ‘outperform’ rating and a 21% premium over its current price. Chip stocks also gained lost ground, rebounding from their previous two sessions’ sell-off.
Consumer Discretionary and Industrials sectors were the other gainers of the session, up 0.54% and 0.13% respectively. Amazon.com Inc. climbed 1.93% after an analyst at Stifel Nicolaus upgraded the e-commerce giant’s stock and raised its price target to $2,525, a 27% premium over its current price, citing its leadership in the fast-growing e-commerce and cloud markets. Several Retail stocks traded lower for the day, weighed down by Amazon’s upgrade.
On the other hand, Materials stocks continued their trend downwards, falling 0.20% on the back of a strengthening dollar for the second straight day after the Federal Reserve increased its benchmark interest rate for the third time this year, sending commodities and metal prices lower. Concerns of a flattening yield curve also weighed down on banking stocks to send the broader Financials sector lower by 0.34%.
Conagra Brands Inc. was the worst performer in today’s session, tumbling 8.54% on missing earnings and sales estimates and leading the Consumer Staples sector lower by 0.20%. Campbell Soup Co. also fell sharply by 5.44%, further dragging the sector lower.
On the economic data front, the U.S. weekly jobless claims rose to its highest level since August, primarily due to the Hurricane Florence effect, which temporarily displaced some of the workers. Meanwhile, Gross Domestic Product for the second quarter rose at a 4.2% annualized rate, suggesting strength in the economic growth.