Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 01/30” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
With the earnings season kicking off in full swing, today’s market action was primarily driven by the latest batch of mixed earnings reports. Confidence remained capped ahead of Fed Chairman Jerome Powell’s keenly awaited news conference and the highly awaited U.S. – China trade talks.
While Technology sector extended its weakness ahead of the key earnings by mega-cap tech stocks like Apple, Facebook and Microsoft, defensive sectors helped lift the index on the back of low Treasury yields. With seven out of the eleven primary sectors trading higher for the day, the index closed the choppy session at 2639.49, down slightly by 4.36 points and losing 0.16% over previous session’s close. With several key economic and political developments looming in the background, the S&P 500 index remains range bound between our often mentioned technical resistance and support levels of 2673 and 2633. (Click here to read the full report)
THE DETAILS (The “How & Why”):
Semiconductor stocks extended their decline to weigh down on Technology sector for the third session in a row. NVIDIA Corp. led the tech space lower for the second day, falling another 4.64% after being downgraded by several analysts on posting weaker-than-expected outlook. Advanced Micro Devices Inc. fell 4.61% ahead of its earnings release but spiked 10% in after-trade hours on meeting earnings estimates.
Microsoft Corp, Facebook Inc. and Qualcomm Inc. all fell more than 2% ahead of their earnings reports. While Apple Inc. shed 1.04% ahead of its keenly awaited quarterly results, the tech-giant jumped more than 6% in after-trade hours on reporting revenues in line with expectations. Partially offsetting some of these declines were strong gains in Corning Inc. and Xerox Corp., both soaring 11.07% and 11.40% on beating earnings estimates.
Communication Services sector was the next biggest drag on the index, down 1.06%, led lower by Verizon Communications Inc. The telecommunication conglomerate fell 3.29% on posting mixed quarterly results. Leading the Consumer Discretionary sector lower was Harley-Davidson Inc., declining 5.05% following disappointing results. While Amazon.com Inc. and Netflix Inc. further weighed down on the broader sector, falling 2.69% and 2.01%, a sharp 9.67% jump in Whirlpool Corp helped offset these declines.
Financials sector closed the session modestly lower by 0.30% as Treasury yields edged lower ahead of the highly awaited speech by Fed Chairman Jerome Powell. Investors will be closely watching out for any fresh insight into the central bank’s future monetary policy and its plans for balance-sheet reduction.
On the other hand, Industrials sector regained lost ground after being dragged lower by Caterpillar Inc. in the last session, on the back of upbeat results posted by Dover Corp., Harris Corp. and L3 Technologies Inc. A subdued dollar index helped lift Materials sector higher by 1.01%.
Defensive sectors also continued to benefit from lower yields. Real Estate, Health Care, Utilities and Consumer Staples all closed the choppy session higher at 0.79%, 0.47%, 0.29% and 0.17%, respectively. Oil prices bounced back from previous session’s slump after the U.S. slapped sanctions on Venezuelan state-owned oil firm, in an attempt to curb the country’s crude exports.