Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 04/03” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
Taking a breather from a strong 3-day rally that took the S&P 500 index to a 6-month high, the index closed today’s session essentially unchanged. Investors keenly await any developments around U.S. – China trade negotiations that are set to resume tomorrow. Whipsawing within a narrow range, the index closed at 2867.24, only 0.05 point above previous session’s close.
Sector-wise performance was mixed with Consumer Staples and Energy leading the declines and Real Estate partially offsetting declines with modest gains. Technically speaking, in an indication of near-term bullish trend, the index has now formed a death cross with the 50 DMA crossing 200 DMA from below.
THE DETAILS (The “How & Why”):
Treasury yields gave back some of their previous session’s gains as investors digested the latest development around Brexit talks. In an attempt to break the parliamentary stalemate, U.K. Prime Minister Theresa May requested for an extension of the Brexit deadline for further negotiations with the opposition Labour party. Investors also digested stronger-than-expected U.S. manufacturing data that indicated the factory activity expanded last month after dropping to its lowest level since 2016 in prior month.
Price action remained lackluster ahead of the closely watched trade negotiations between U.S. and Chinese officials that will resume tomorrow in Washington. While performances across sectors were relatively modest, some of the major movers on the back of earnings were Walgreens Boots Alliance Inc. and Delta Air Lines Inc.
Walgreens Boots Alliance Inc. plunged 12.81% in its worst day since 2014, after the drug store giant missed sales estimates and issued a weak profit outlook for the fiscal year, citing non-recurring expenses, coupled with lower pharmacy and retail volumes. Consumer Staples was the worst performing sector, closing lower by 0.84%.
Energy sector closed 0.70 lower, giving back some of its recent gains despite oil prices rising for the fourth straight session on the back of supply tightening by OPEC. Health Care sector was the other notable decliner of the session, down 0.24%. AmeriSourceBergen Corp., Cardinal Health Inc. and CVS Health Corp. were among the worst decliners of the session, falling 5.82%, 3.99% and 3.80%, respectively.
Offsetting some of these declines were gains in Real Estate, Materials and Communication Services sectors, all closing modestly higher by 0.86%, 0.40% and 0.40%, respectively. Facebook Inc. jumped 3.26% following comments by Deutsche Bank that the social media giant could increase its revenue by $10 billion as a result of its new Facebook Instagram platform that lets Instagram users browse and purchase offerings directly from 23 top brands in the U.S.
Meanwhile, Delta Air Lines Inc. soared 6.04%, lifting other airline stocks after it raised its first-quarter earnings guidance, citing stronger-than-expected demand. American Airlines Group Inc. and Southwest Airlines rose 1.98% and 0.57%, respectively.
