Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 03/27” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
Brushing aside fears of an impending recession, the S&P 500 index rebounded from previous two sessions’ losses alongside a sharp rally in Energy stocks. Gains however remained capped amid signs of recession as the spread between the 3-month and 10-year Treasury yields continue to remain in negative territory.
Despite dismal housing data, the index rallied at the open but pulled back on registering the day’s high at 2829.87 alongside a slide in Apple Inc. The index, however, closed off session highs at 2818.46, up a decent 20.10 points and gaining 0.72% over previous session’s close. All of the eleven primary sectors participated in gains in today’s choppy session.
THE DETAILS (The “How & Why”):
Energy sector led the day’s advances, up a solid 1.45% as oil prices briefly rose above the $60/barrel after Russia reaffirmed its commitment to cut output in an attempt to support prices. Cimarex Energy Co, Concho Resources Inc. and Anadarko Petroleum Corp were the strongest performers within the sector, all closing higher by more than 3% each.
Banking and Financials stocks gained ground as Treasury yields took a breather from its sharp decline in the previous two sessions. The 10-year Treasury yield edged up to 2.42% but still remained below the 3-month Treasury yields as a sign of a possible recession. The broader Financials sector closed 1.13% higher with Citigroup Inc., Bank of America Corp, Goldman Sachs Group Inc. and J.P. Morgan Chase & Co all gaining more than 1% each.
Among the other notable gainers were Industrials and Utilities sectors, each closing 0.70% higher. Consumer Staples, Health Care and Real Estate sectors also posted decent gains of 0.85%, 0.68% and 0.67%, respectively. Viacom Inc., Biogen Inc. and CBS Corp were top gainers of the session, rising 7.64%, 5.74% and 3.93%.
While Qualcomm Inc. jumped 2.40%, Apple Inc. capped gains within the technology space, falling 1.03% after a U.S. trade judge endorsed banning imports of the iPhones into the country, citing a patent dispute with Qualcomm Inc.
Homebuilding stocks traded lower after the housing starts data registered its worst decline since June 2018, falling 8.7% in February, despite rising wages and falling mortgage rates. D.R. Horton Inc. and Home Depot Inc. fell 0.88% and 0.18%, respectively. On the earnings front, Carnival Corp. was the worst decliner of the session, tumbling 8.72% in its worst day in almost a year on missing earnings estimates and guiding lower for the full fiscal year.