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THE GIST (“THE WHAT”)
Resuming the bullish rally after a 2-day pause, the S&P 500 index surged at the open to hit a fresh intra-day high at 3097.77 amid headlines that U.S. and China are willing to simultaneously roll back some of their tariffs on each other.
Optimism faded and gains were trimmed during the late session following cautious headlines that the tariff roll back faces opposition in White House. The index closed off of session highs, albeit printing a new record daily close at 3085.18, up 8.40 points and gaining 0.27% over previous session’s close. While Energy stocks led the index higher, rotation out of defensives and into cyclicals capped the day’s strong gains.
THE DETAILS (The “How & Why”):
Selling of safe-haven bonds continued to push Treasury yields higher on fresh signs of a potential U.S. China trade deal. The 10-year Treasury yield climbed the most since 2016 election, settling at its 3-month high at 1.924%. Yield curve between long-dated and short-dated notes steepened, benefiting bank stocks. Bank of America Corp, Citigroup Inc. and Goldman Sachs Group jumped more than 1% each.
Technology and Communication Services also posted modest gains. Qualcomm Inc. led semiconductor stocks higher, surging 6.32% on beating revenue and earnings expectations on the back of solid performance by its technology licensing business.
Energy sector posted the biggest percentage gains of the session, up 1.58% alongside a rebound in oil prices on trade optimism. EOG Resources Inc. topped the gains with a 4.65% jump. Marathon Petroleum Corp, HESS Corp and ConocoPhillips gained more than 3% apiece.
Weakness in Utilities and Real Estate capped the gains for the third session in a row, closing sharply lower by 1.35% and 1.08% amid a rotation out of defensive stocks and into cyclicals and growth stocks alongside rising risk appetite.
On the earnings front, Ralph Lauren Corp soared 14.66% on delivering better-than-expected quarterly result. Discovery Inc., CenturyLink Inc. and Fox Corp were the other strong gainers on the back of earnings beat, up 12.06%, 11.38% and 5.94% respectively.
On the other hand, Expedia Group Inc. and TripAdvisor Inc. tanked 27.39% and 22.41%, after these online travel websites missed revenue estimates in the wake of growing competition in fast-changing travel industry. While online travel agent Booking Holdings Inc. also plunged 8.06%, it pared losses in after-hours session on reporting quarterly earnings that beat expectations.