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THE GIST (“THE WHAT”)
Fresh signs of economic slowdown, coupled with doubts over the U.S. – China trade deal soured sentiment at the open. The S&P 500 index retreated sharply below its all-time highs it printed on Wednesday after the Fed announced the expected third rate cut but hovered around record high levels for most part of the session. Trimming losses during the last hour of the trading, the index closed off of session lows at 3037.56, down 9.21 points and losing 0.30% over previous session’s close.
THE DETAILS (The “How & Why”):
Weaker-than-expected manufacturing data that fell to a near four-year low provided a yet another evidence of slowing domestic economy. U.S. consumer spending also grew slower than expected for the month of September. China’s manufacturing and service sectors contracted further in October, renewing concerns of global economic weakness.
On the trade front, reports that China doubts that a comprehensive long-term trade deal with U.S. is feasible unless all tariffs are lifted dampened trade optimism. Trade sensitive Industrials and Materials sectors were the biggest percentage decliners of the session amid renewed trade concerns, down 1.14% and 1.10%, respectively.
Treasury yields extended their slide across maturities one day after the Federal Reserve announced the expected third rate cut. The yield on 10-year Treasury yield fell the most in 12 weeks by eight basis points to 1.69%. Investors will be closely reading into the October’s jobs report and ISM manufacturing data due tomorrow for further insights into the health of economy.
The yield curve between 2-year and 10-year treasury notes flattened, weighing down on bank and financials stocks across the board. Energy and Consumer Discretionary were the other notable decliners, down 0.47% and 0.46%, respectively. Oil prices fell to a one-week low amid growing signs of economic slowdown and renewed trade woes.
Utilities and Communication Services were the only sectors to close higher for the day, up 0.46% and 0.27%. On the earnings front, Apple Inc. jumped 2.26% after the tech-giant beat earnings estimates despite falling iPhone demand. Facebook Inc. also climbed 1.81% on better-than-expected revenue and earnings.
Abiomed Inc. and Kraft Heinz Co. were the strongest performers of the session, soaring 14.20% and 13.44% on delivering an impressive quarterly performance. On the other hand, Western Digital Corp. weighed down heavily on the Technology space, sinking 16.91% after the data storage company issued a softer-than-expected outlook and announced the retirement of its CEO.