Note: Our nightly “S&P 500 Outlook, Forecast, and Trading plan for Fri, 07/20” will be posted Thursday, 07/19 night – please check back around 10:30pm/11pm EDT.
THE GIST (“THE WHAT”)
The S&P 500 index fell lower at the open on renewed trade war concerns after President Trump reiterated his commitment to raise tariffs if the European Union does not settle for a fair trade deal. Disappointing earnings further weighed down on investor sentiment dragging the index down to briefly breach the 2800 level and register the day’s low at 2799.77.
Swinging within a narrow range and bouncing on and off the models’ indicated support level of 2800, the index closed near session lows at 2804.49, down 11.13 points and losing 0.40% over previous session’s close. Led by Financials and Telecommunications, nine out of the eleven primary sectors ended the day lower in today’s broad-based sell-off.
THE DETAILS (The “How & Why”):
Reversing gains after leading the index in Wednesday’s session, Financials stocks shed 1.44% alongside a fall in yields as investors moved towards safe haven assets on renewed trade war concerns. Treasury yields were further sent lower following an unusual comment from Trump – unusual for any American President so far in the history of the United States.
President Trump criticized the recent rate hike policies by the Federal Reserve citing that high interest rates could negate benefits from the recent fiscal stimulus efforts by his administration. Fifth Third Bancorp and Bank of New York Mellon Corp. were the worst performers in the sector, down 6.38% and 5.23% respectively.
Telecommunications and Consumer Discretionary sectors also led the index lower amid escalating trade tensions by 1.10% and 0.21% respectively. Shares of Comcast Corporation rose 2.56% after ending the long ongoing bidding war with Walt Disney Co to acquire assets of 21stCentury Fox. While shares of Walt Disney Co were sent higher by 1.30%, shares of 21st Century Fox Inc. were sent tumbling at the session open, but the losses were trimmed later in the session to end slightly down by 0.06%.
Stocks of one of the largest copper producers in the world Freeport-McMoRan fell sharply by 7.49%, weighing down on the broader Materials sector. The sector ended the day lower by 0.61% alongside a fall in prices of commodities and metals.
The broader Technology sector was down 0.33% led by a 10.12% drop in stocks of eBay Inc. The company was the biggest drag on the index after reporting a weak guidance for the fiscal year. Amongst other noticeable losers in today’s broad-based sell-off were Health care, Technology and Consumer Staples which shed 0.55%, 0.33% and 0.13% respectively.
On the other hand, Energy stocks held on to gains throughout the session as oil prices edged up after Saudi Arabia denied any plans to increase output, instead hinting at reducing
exports in an effort towards reducing oversupply in the global markets. The sector, however, erased the day’s gains later in the session, ending the day lower by a slight 0.02% in today’s broad-based sell-off.
exports in an effort towards reducing oversupply in the global markets. The sector, however, erased the day’s gains later in the session, ending the day lower by a slight 0.02% in today’s broad-based sell-off.
Limiting losses and supporting gains in today’s session were defensive sectors that gained on the back of falling yields. Real Estate and Utilities erased previous session gains to be the only sectors gaining in today’s session, up 1.01% and 0.93% respectively.